President George W. Bush, who favored a smaller government sector,
A. believed we should increase G to eliminate a recessionary gap.
B. believed we should raise taxes to eliminate an inflationary gap.
C. favored an active fiscal policy just as well as those who favor a larger government sector.
D. argued against the use of an active fiscal policy.
Answer: C
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Larger countries will trade more with one another; this is empirically supported by:
a. the intra-industry trade. b. the increasing returns to scale. c. the gravity equation. d. the comparative advantage.
In the foreign exchange market, the supply curve for dollars slopes upwards because
A) as the exchange rate rises, imports become more expensive, and more dollars are supplied to pay for the imports. B) as the exchange rate rises, imports become cheaper, and more dollars are supplied to pay for the increase in the quantity of imports. C) as the exchange rate rises, more dollars are supplied since the profit from selling dollars falls. D) supply curves always slope upwards.