One Method for a Deficit Country to Correct the Situation

question 43

Multiple Choice

One method for a deficit country to correct the situation under a fixed exchange rate system is to

• A)increase aggregate demand with stimulative monetary policy.
• B)increase aggregate supply with tax cuts.
• C)decrease aggregate demand with restrictive fiscal and monetary policy.
• D)decrease aggregate supply with restrictive fiscal policy.

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Definitions:

James-Lange Theory

A theory of emotion suggesting that physiological arousal precedes the experience of emotion.

Physiological Changes

Alterations in the body's normal biological functions or processes, which can occur due to various factors such as stress, exercise, or illness.

Emotion

A multifaceted mental state that encompasses a personal sensation, physical reaction, and an action or expressive reaction.

Cannon-Bard Theory

A theory of emotion that argues that physiological arousal and the emotional experience occur simultaneously and independently.