When Recessions Are the Result of Slowing Growth in Potential

question 29

Multiple Choice

When recessions are the result of slowing growth in potential output, the government's best response is a policy to:

• A) increase aggregate demand.
• B) decrease aggregate demand.
• C) promote saving and investment.
• D) reduce government spending.

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Definitions:

Brazil Reals

The official currency of Brazil, denoted as BRL and symbolized as R$.

Temporal Method

An exchange rate conversion method that uses specific rates depending upon the timing of the original acquisition of assets and liabilities.

Total Assets

The sum of all resources owned by a company, including cash, investments, property, and other financial assets reflected on the balance sheet.

Cumulative Translation Gain

The total gain or loss resulting from the translation of foreign currencies into the functional currency over a period of time.