Author Question: The specific factors model assumes that there are goods and factor(s) of ... (Read 40 times)

Medesa · **on:** Jun 30, 2018

The specific factors model assumes that there are ________ goods and ________ factor(s) of production.

A) two; three
B) two; two
C) two; one
D) three; two
E) four; three

Question 2

Use a figure to explain the potential effectiveness of fiscal policy to spur on the economy under a fixed exchange rate.

What will be an ideal response?

jliusyl · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

With an aim toward increasing output, the government could use fiscal policy to shift the DD curve outward. The central bank will have to take steps to maintain a fixed exchange rate , among the options is buying foreign assets with money, to shift the AA schedule outward until the equilibrium at point 3 is reached.