The use of fiscal policy to stabilize the economy is limited ...

[cookcarl]

The use of fiscal policy to stabilize the economy is limited because
 
  A) changes in government spending and tax rates have a small effect on interest rates.
  B) the Internal Revenue Service (IRS) resists changes in tax rates because of all the changes they would have to make to the tax code.
  C) changes in government spending and tax rates have a small effect on aggregate demand.
  D) the legislative process can be slow, which means that it is difficult to make fiscal policy actions in a timely way.

Question 2

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift?
 
  What will be an ideal response?

[GCabra]

Answer to Question 1

D

Answer to Question 2

The three main sets of factors are changes in the demand for U.S.-produced goods and services and changes in the demand for foreign-produced goods and services; changes in the desire to invest in the United States and changes in the desire to invest in foreign countries; and changes in the expectations of currency traders about the likely future value of the dollar and the likely future value of foreign currencies.

[cookcarl]

Gracias!

[kjohnson]

YES! Correct, THANKS for helping me on my review