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:

DNA

DNA, a molecule responsible for carrying the genetic blueprints essential for the growth, development, operational processes, and reproduction of all recognized living entities and numerous viruses.

Flagellum

A flagellum is a whip-like appendage found on some cells, including bacteria and spermatozoa, that aids in locomotion.

Sperm Cell

is the male gamete or reproductive cell involved in fertilization of the female ovum.

Microvilli

Small, finger-like projections on the surface of some cells that increase the surface area for absorption or secretion.