A contractionary fiscal policy negates some of the leftward shift of the aggregate demand curve because the resulting fall in interest rates
A) increases the quantity of investment, raises the exchange rate and boosts net exports.
B) discourages savings, decreases the quantity of investment, raises the exchange rate, and reduces net exports.
C) increases the quantity of investment, lowers the exchange rate, and boosts net exports.
D) discourages savings, increases consumption, and reduces the quantity of investment and imports.
Ans: C) increases the quantity of investment, lowers the exchange rate, and boosts net exports.
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See the information in Scenario 4.4. Does the demand curve for Rock and Roll Trivia slope downward?
A) Yes it does. B) No it does not. C) More information is needed to answer this question.
Considering only its direct effect on income, expansionary fiscal policy tends to:
A. decrease income and imports, shifting the U.S. trade balance in the direction of a surplus. B. increase income and imports, shifting the U.S. trade balance in the direction of a surplus. C. decrease income and imports, shifting the U.S. trade balance in the direction of a deficit. D. increase income and imports, shifting the U.S. trade balance in the direction of a deficit.