For This Question, Assume That Equilibrium Output Is Determined in the ZZ-

question 45

Multiple Choice

For this question, assume that equilibrium output is determined in the ZZ- Y diagram. Further assume that policy makers' goals are: (1) to achieve balanced trade to achieve the natural level of output, say Yn. Now suppose that the initial level of equilibrium output is equal to Yn (i.e., Y = Yn) and that a trade deficit exists at this initial level of output. Which of the following policy actions would most likely enable the policy makers to achieve their two goals simultaneously?

• A) A decrease in the real exchange rate.
• B) A decrease in taxes and increase in the real exchange rate.
• C) Convince the country's trading partners to pursue policies that will cause an increase in foreign income.
• D) A decrease in government spending.
• E) A decrease in government spending and the real exchange rate.

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Definitions:

Good Citizens

Individuals who actively contribute to the well-being of their community by obeying laws, voting, and participating in civic activities.

Preconventional

Refers to the first level of Kohlberg's stages of moral development, where behavior is guided by the consequences of actions (punishment, reward) rather than internalized moral principles.

Fairness And Equality

The principles of treating people justly, without discrimination, and ensuring equal opportunities and rights for all members of society.

Postconventional

A stage in moral development where individuals' ethical principles guide their behavior, rather than societal norms or authorities.