To satisfy the admission criteria to the European Union, a country must meet all of the following, EXCEPT:
A) maintain an inflation that is equal to the average of the three lowest rates.
B) maintain long-term interest rates equal to that of the three countries with the lowest inflation rates.
C) maintain a pegged exchange rate, without any revision for two years.
D) cut down taxes to the lowest possible level.
Answer: D) cut down taxes to the lowest possible level.
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Discretionary fiscal policy refers to
A) deliberate government efforts to stabilize the economy through government spending and taxes. B) the use of automatic stabilizers and intervention policies to stabilize the economy. C) any government policy that requires a lag period of at least three months. D) the deliberate use of government spending and taxes to complement the effects of monetary policy in an effort to stabilize the economy.
When the economy is operating at an unemployment rate below the full employment rate,
a. actual output is above potential output b. actual output equals potential output c. actual output is below potential output d. frictional unemployment has been eliminated e. structural unemployment has been eliminated