Compared to an Economy's Self-Correcting Mechanism, Active Contractionary Fiscal Policy

question 127

Multiple Choice

Compared to an economy's self-correcting mechanism, active contractionary fiscal policy will

• A)work more slowly and calmly.
• B)work more quickly.
• C)have less deflationary effects.
• D)have a smaller effect on real GDP.

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Definitions:

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The rate at which one currency can be exchanged for another.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

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