If two interdependent economies work independently pursuing the best interests of their own economies
A) both countries can end up worse than they planned because of international externalities.
B) they will make other economies more vulnerable to international externalities.
C) they will have to sacrifice their monetary autonomy to achieve their goals.
D) both countries can end up worse than they planned because of the liquidity effect.
A
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Which is an example of restrictive fiscal policy?
A) An increase in the discount rate B) An increase in the federal funds rate C) An increase in reserve requirements D) A lowering of tax rates E) A lowering of government spending
As the economy moves up and to the left along the IS curve, which of the following will occur when exchange rates are flexible?
A) investment spending decreases B) consumption decreases C) the domestic currency appreciates D) all of the above E) none of the above