Suppose Policy Makers Want to Reduce Y and NX

question 68

Multiple Choice

Suppose policy makers want to reduce Y and NX. Which of the following policies would most likely achieve this?

• A) An increase in taxes and a decrease in the real exchange rate.
• B) An increase in taxes.
• C) A decrease in government spending.
• D) A decrease in the real exchange rate.
• E) A real exchange rate appreciation

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Definitions:

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained by the company for reinvestment in its operations, rather than being distributed to its shareholders as dividends.

Tax Rate

The percentage at which an individual or corporation is taxed.

Depreciable Non-Current Asset

A long-term asset subject to depreciation, which systematically reduces its book value over its useful life to account for wear and tear.

NCI Share

NCI Share refers to Non-Controlling Interest share, which is the portion of equity in a subsidiary not attributable directly or indirectly to the parent company.