Suppose Policy Makers Want to Increase Y and Increase NX

question 25

Multiple Choice

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

• A)an increase in government spending
• B)a real depreciation
• C)a reduction in taxes and an increase in the real exchange rate
• D)an increase in the real exchange rate

---

Definitions:

Static Theory

A theory that analyzes economic variables without considering changes over time.

Business Risk

Business risk pertains to the potential for loss that a business faces from factors affecting its profitability or operational success, such as market competition and demand fluctuations.

Financial Risk

The possibility of losing money on an investment or business venture due to market conditions, interest rate changes, or other financial factors.

Interest Tax Shield

The reduction in income taxes that results from the deduction of interest payments on debt from taxable income.