Suppose Policy Makers Want to Increase NX and Keep Y

question 17

Multiple Choice

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

• A)a reduction in government spending
• B)a real depreciation
• C)a reduction in government spending and a reduction in the real exchange rate
• D)a reduction in the real exchange rate and a tax cut

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Definitions:

Pakicetus

An extinct genus of early whales living in the Eocene epoch, illustrating a significant stage in the transition from land to sea creatures.

Modern-day Whales

Current species of whales that descended from land-dwelling ancestors through a series of evolutionary transitions over millions of years.

Hippopotamus

A large, mostly herbivorous mammal native to sub-Saharan Africa, known for its large size, semi-aquatic habits, and aggressive nature.

Hemagglutinins

Proteins found on the surface of certain viruses, like influenza, that enable the virus to bind to and infect host cells.