In Most Cases,expenditure-Switching Policies Must Be Accompanied by Expenditure-Reducing Policies

question 8

Multiple Choice

In most cases,expenditure-switching policies must be accompanied by expenditure-reducing policies because

• A)expenditure-switching policies are completely ineffective without expenditure-reducing policies.
• B)inflation ensues as home country domestic expenditures switch away from foreign goods to domestic goods unless overall expenditures are reduced.
• C)inflation abroad may increase the demand for domestic goods,causing inflation to rise.
• D)the depreciation in the exchange rate may decrease the domestic price of foreign goods,causing an increase in the current account deficit.
• E)None of the above.

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Definitions:

Mass Number

Number of protons plus the number of neutrons in each atom.

Neutrons

Subatomic particles found in the nucleus of an atom that have no electric charge.

Mass Number

The total number of protons and neutrons in an atom's nucleus, indicating the mass of the atom.

Atomic Number

The number of protons in the nucleus of an atom, which determines the chemical properties of an element.