Export demand shocks are likely to be least disruptive to a country with
A. a fixed exchange-rate system with sterilization.
B. a fixed exchange-rate system without sterilization.
C. a floating exchange-rate system.
D. a deficit in the current account.
Answer: C
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To eliminate a recessionary gap, Keynesian theory indicates that government should
A) increase taxes. B) decrease taxes. C) increase government purchases. D) decrease government purchases. E) b or c
The Central Bank of Wiknam decreases the money supply at the same time the Parliament of Wiknam repeals a new investment tax credit. Which of these policies shifts aggregate-demand curve to the left?
a) the investment tax credit repeal but not the money supply decrease b) the money supply decrease but not the investment tax credit repeal c) both the money supply decrease and the investment tax credit repeal d) neither the investment tax credit repeal nor the money supply decrease
If the world supply curve is SW0,
A. domestic quantity supplied is unrelated to domestic quantity demanded. B. domestic quantity supplied exceeds domestic quantity demanded. C. domestic quantity supplied equals domestic quantity demanded. D. domestic quantity supplied is less than domestic quantity demanded.
Exporting nations often agree to voluntary export restraints (VERs) in an attempt to:
A. employ more workers in the importing nation. B. avoid more restrictive trade policies. C. increase global welfare. D. decrease inflation.