Suppose Policy Makers Want to Increase Y and Keep NX

question 21

Multiple Choice

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

• A)an increase in government spending
• B)a real depreciation
• C)an increase in government spending and a reduction in the real exchange rate
• D)a reduction in the real exchange rate
• E) encourage the country's trading partners to implement policies that will cause an increase in foreign income (Y*)

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Definitions:

Political Activity

Participation in activities aimed at influencing public policy and government decisions, including voting, campaigning, and lobbying.

Government

The system or organization through which a community, state, or nation is governed, responsible for creating and enforcing laws, policies, and regulations.

Peace And Security

A concept referring to the protection and preservation of a state's or region's stability and safety from conflict and violence.

Liberty

The state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views.