Question
If the dollar appreciates, thenNet Exports will decrease; so Aggregate Demand will_________________ (increase / decrease ), and the economy will head into a_____________ (boom /
If the dollar appreciates, thenNet Exports will decrease; so Aggregate Demand will_________________(increase / decrease), and the economy will head into a_____________(boom / recession). In this outcome, the price level will________________(increase / decrease) and short-run GDP will________________(increase / decrease)
Suppose the government decides to fix this problem. Using monetary policy, they could______________(increase/decrease) the money supply or____________(increase/decrease) the interest rate to____________(increase/decrease)______________(Consumption/Investment/Governmentpurchases/Net Exports)
Using fiscal policy, they could______________(increase/decrease) taxes or______________(increase/decrease) Government purchases. However, changing Government purchases has a multiplier effect on______________(Consumption/Investment/Governmentpurchases/Net Exports) and "crowds out"____________(Consumption/Investment/GovernmentPurchases/Net Exports), making it difficult to estimate its effectiveness
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