In a booming economy, discretionary fiscal policy:
A. removes the effect of the automatic stabilizers that already are present.
B. can be added to the automatic stabilizers effects of policies already in place.
C. often acts counter to the automatic stabilizers that already exist.
D. All of these are true.
Answer: B
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Using the above figure, an increase in the demand for Dutch goods by U. S. consumers will lead to
A) a depreciation in the Dutch currency. B) an appreciation in the Dutch currency. C) an increase in the supply of Dutch currency as foreign exchange. D) a decrease in the supply of Dutch currency as foreign exchange.
If you can produce more of something than others with the same resources, you have
A) a free-market economy. B) an absolute advantage. C) an efficient production system. D) a comparative advantage.