Which of the following is most likely to increase the exports of a country?
a. The government gives subsidies to firms that export goods or services.
b. The government reduces the size of the budget surplus.
c. Political instability within the country increases modestly.
d. None of the above will increase exports.
c
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A federal budget deficit places a genuine burden on future generations when the
a. crowding-out effect is stronger than the crowding-in effect. b. crowding-in effect is stronger than the crowding-out effect. c. crowding-out and crowding-in effects work in opposite directions. d. crowding-out and crowding-in effects operate in the same direction.
According to the Taylor rule, when real GDP is at its potential and inflation is at its target rate of 2 percent, the Fed should:
A. carefully lower the federal funds rate in an attempt to stimulate noninflationary real GDP growth. B. raise the federal funds rate in an attempt to eliminate the remaining inflation. C. lower the federal funds rate to lower borrowing costs for the federal government. D. keep the federal funds rate at 4 percent.