The best test of an economic theory is:
a. the rigor of its mathematical formulation.
b. its ability to explain and predict

Refer to Figure 19-10. Under the Bretton Woods System of exchange rates, if the par exchange rate was $2 per pound in the figure above, and equilibrium persisted at $3, then this was evidence of ________ and the IMF would allow a ________ in the

exchange rate. A) fundamental disequilibrium; revaluation B) fundamental disequilibrium; devaluation C) fundamental overvaluation; revaluation D) fundamental overvaluation; devaluation

Recent studies on the effectiveness of fiscal policy tend to suggest that increases in government spending are more effective than tax cuts in stimulating real GDP

a. True b. False Indicate whether the statement is true or false