An increase in the U.S. interest rate differential increases the demand for dollars

In the figure above, the ________ gap is one trillion dollars. To close the gap, the government can change expenditure by ________ one trillion dollars

A) recessionary; less than B) inflationary; exactly C) inflationary; more than D) recessionary; more than E) recessionary; exactly

During the recession of 2001,

a. there were a number of proposals for tax increases or spending cuts to stir the economy, but they failed due to worries about their effects on the already large deficit. b. a series of tax cuts were passed, though they only occurred in late 2001. c. all the proposed tax and spending cuts were approved in order to motivate the economy and reduce the large deficit. d. the cyclical deficit increased but the structural deficit remained unchanged. e. None of the above