To Close a Contractionary Gap Using Fiscal Policy,the Government Can

question 147

Multiple Choice

To close a contractionary gap using fiscal policy,the government can

• A)increase government spending by the size of the gap
• B)decrease government spending by the size of the gap
• C)increase government spending by more than the size of the gap
• D)increase government spending by less than the size of the gap
• E)decrease government spending by more than the size of the gap

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Definitions:

North American Free Trade Agreement

A trade agreement between Canada, Mexico, and the United States designed to reduce tariff barriers and increase economic cooperation.

Tariffs

Taxes imposed by a government on imported goods, often used to protect domestic industries and regulate trade.

Trade Embargoes

Government-imposed restrictions on the exchange of goods and services with a particular country or group of countries.

USMCA

The United States-Mexico-Canada Agreement, a free trade agreement between these three countries that replaced NAFTA.