Author Question: Country X and Country Y are two neighboring countries which are experiencing recession. The ... (Read 152 times)

joesmith1212 · **on:** Jun 30, 2018

Country X and Country Y are two neighboring countries which are experiencing recession. The government of Country X reduced its expenditure during the recession while Country Y's government increased the supply of money in the economy.

Which of the two policies will help the economy to recover from the recession?

Question 2

You have data for sales of pizza for each of the 50 states in 2011. The type of graph to best display these data would be a

A) trend-line diagram.
B) scatter diagram.
C) multi-variable time-series graph.
D) cross-section graph.
E) time-series graph.

wtf444 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Aggregate demand falls during a recession. This reduces production and demand for labor leading to a sharp increase in unemployment, lowering private expenditure further. If the government also reduces its expenditure during a recession, production will fall even more leading to more job losses. On the other hand, if the central bank increases the supply of money, the aggregate price level will increase. An increase in output prices will lead to an increase in production. As a result, firms will hire more workers. Thus, the policy adopted by the government of Country Y is a better policy.

Answer to Question 2

D