According to the assignment rule, which of the following policy mixes is appropriate for a country with high unemployment, a balance of payments deficit, and fixed exchange rates?
A. Expansionary fiscal policy and contractionary monetary policy
B. Contractionary fiscal policy and contractionary monetary policy
C. Contractionary fiscal policy and expansionary monetary policy
D. Expansionary fiscal policy and expansionary monetary policy
Answer: A
You might also like to view...
The index that measures the change in price of a typical basket of consumer goods is
a. the GDP deflator. b. the consumer price index. c. nominal GDP. d. real GDP.
When the Federal Reserve sells U.S. government securities on the open market, this tends to ____ banks reserves and ______ the money supply.
A. raise; raise B. lower; lower C. raise; lower D. lower; raise
If the MPC is 0.6 and if government purchases and net taxes both increase by $20 billion, by how much will equilibrium output change?
a. It will increase by $80 billion. b. It will increase by $20 billion. c. It will not change because the changes in government purchases and net taxes will cancel each other out. d. It will decrease by $20 billion. e. It will decrease by $80 billion.
The main reason for diversification for an investor is to:
A. lower transaction costs. B. take advantage of the fact that returns on assets are not perfectly correlated. C. take advantage of the fact that returns of assets are perfectly positively correlated. D. gain from the greater returns that come from greater risk.