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For This Question,assume That Equilibrium Output Is Determined in the ZZ-Y

question 33

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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 (i.e.,NX = 0); and (2)to achieve a target level of output,say Yᵀ.Now,suppose that the initial level of equilibrium output is equal to Yᵀ (i.e.,Y = Yᵀ)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 reduction in government spending
B)convince the country's trading partners to pursue policies that will cause an increase in foreign income (Y*)
C)a reduction in the real exchange rate
D)a reduction in taxes
E) a simultaneous increase in government spending and reduction in the real exchange rate
F) none of the above

Definitions:

Dividends Declared

The announcement by a company's board of directors that a dividend will be paid to shareholders, specifying the amount and the payment date.

Common Stockholders

Individuals or entities that own shares of common stock in a company, representing ownership interests and typically having voting rights.

Accounting Principles

The rules and guidelines that companies must follow when reporting financial data, ensuring consistency, reliability, and comparability of financial statements.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used globally.