Author Question: During a recession: a. Government spending automatically falls and taxes automatically rise. b. ... (Read 120 times)

tth · **on:** Jun 30, 2018

During a recession:
a. Government spending automatically falls and taxes automatically rise.
b. Government spending and taxes automatically fall.
c. Government spending and taxes do not tend to change.
d. Government spending rises automatically and taxes fall automatically.
e. None of the above.

Question 2

If a nation has flexible exchange rates and its current and capital accounts equal zero, then the:
a. Financial account must be positive
b. Financial account can be positive or negative depending on the size of the budget deficit and exchange rate.
c. Reserves account can be positive or negative depending on the size of the budget deficit and exchange rate.
d. Financial account minus the reserves account must equal zero.