What steps did the Federal government take to stimulate the American economy when the recession of 2008-09 hit?
A. It raised both taxes and spending.
B. It raised taxes and cut spending.
C. It cut both taxes and spending.
D. It cut taxes and raised spending.
Answer: D. It cut taxes and raised spending.
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Refer to the above graph. To maximize profits, the firm should produce the quantity:
a. 0C b. 0A c. 0K d. 0B
Advocates of floating rate suggested it is favorable for economies for all of the following reasons EXCEPT
A) it discourages attack from foreign exchange speculators because of the fact that exchange rate adjustment is immediate. B) it helps stabilize the shock effect on unemployment in case of economic changes such as fall in export demand. C) it automatically matches the domestic inflation with ongoing foreign inflation. D) it gives every country the opportunity to guide its own monetary conditions at home. E) it brings the LR exchange rate to the level predicted by PPP without government policy decisions.