Why might economic policies aimed at stabilization actually increase the magnitudes of economic fluctuations?
What will be an ideal response?
Well-timed economic policies can reduce the magnitudes of economic fluctuations. But if the policies are poorly timed, they might work in the opposite direction of the desired outcome. The poor timing can come from lags in implementation, for instance, delay between the time that the policies are implemented and the time they take effect.
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If the dollar per pound exchange rate changes from $1.50 per pound to $2 per pound, it implies that the dollar has appreciated against the pound.
Answer the following statement true (T) or false (F)
Use the figure below to answer the next question. 
Growth of production capacity is shown by the
A. shift from CD to AB. B. movement away from point B and toward point A. C. movement away from point A and toward point B. D. shift from AB to CD.