In an open economy under flexible exchange rates and represented by the IS-LM-IP model, a reduction in government spending will cause a reduction in which of the following?
A) net exports
B) the exchange rate, E
C) exports
D) all of the above
E) none of the above
C
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________ unemployment changes slowly and depends on ________
A) Frictional; the skills of the unemployed B) Seasonal; the rate at which people enter and exit the labor force C) Frictional; the rate at which people enter and exit the labor force D) Structural; the rate at which people enter the labor force E) Structural; the inflation rate
Holding other things constant, decreases in the price level in the US will
a. Cause the dollar to gain value b. Cause the dollar to lose value c. Does not affect the dollar value d. None of the above
One possible solution to an incentive problem arising under unobservable actions is:
A. to be the boss and fire the inefficient worker and send a signal to others. B. to pay more and make the worker efficient. C. to sell the agent the right to the total production. D. to buy the agent's right to his total output.
The amount of time that elapses between the implementation of a policy and the results of that policy is
A. fiscal policy. B. the recognition time lag. C. the effect time lag. D. the action time lag.