If additional domestic production will lead to positive spillover effects, then an import tariff that increases domestic production would better adhere to the specificity rule than would a government subsidy to domestic production.

Policy activists' hope that they can undertake successful stabilization policy is ________ by the fact that natural real GDP ________ during recessions

A) improved, falls B) worsened, falls C) improved, increases D) worsened, increases

Chronic budget deficits can lead to all of the following, except:

A. Over-allocation of resources to the government sector, away from the private sector B. "Smaller government" in the economy C. Investors losing faith in the government's ability to repay its debts D. Government being forced to make drastic cuts in its spending