When exchange rates are fixed, a government, to counter a temporary negative demand shock, should, in part:
A) reduce taxes.
B) reduce defense spending.
C) reduce the money supply.
D) reduce defense spending and the money supply
Ans: A) reduce taxes.
You might also like to view...
If the institutions in an economy change from being extractive to inclusive, the return-to-entrepreneurship schedule in the economy will:
A) become vertical. B) shift leftward. C) become horizontal. D) shift rightward.
According to this Application, some conservatives worry that a value-added tax ________ and some liberals worry that a value-added tax ________
A) will penalize high-income individuals; will decrease per-capita GDP B) will discourage consumers from saving; will decrease federal tax revenue C) will result in consumers not realizing all the taxes they pay; is regressive D) is progressive; will reduce investment.