The current account reflects a. the sale of securities to foreigners b. trade in

Question

The current account reflects a. the sale of securities to foreigners b. trade in tangible products C. trade in services only d. trade in goods as well as services e. the purchase of securities from foreigners 2 points Sa Question 12 Exhibit 16-3 Price level Potential output SRAS AD Real GDP According to those who favor an active approach to policy, how can the economy shown in Exhibit 16-3 attain equilibrium at potential output? 0 a. Either the money supply or government spending should be decreased b. Aggregate demand should be increased ° C. The SRAS curve will shift to the left. d. Either the money supply or government spending should be increased O e. The SRAS curve will shift to the right. 2 points Sa Question 13 Because of automatic stabilizers, government budget deficits are a. negative during both expansions and contractions b. positive during both expansions and contractions c. zero if averaged out over the entire business cycle O C O d. larger during expansions and smaller during contractions e.smaller during expansions and larger during contractions

Explanation / Answer

Answer 1:

Option D. Trade in goods and services.

Answer 12:

We can reach at potential level of output either by shifting AS to left or AD to left.

So, Option A is the answer.

Answer 13 :

Expansions lead to increase in the budget deficit and contractions lead to decline in the budget deficit.

Automatic stabilizers reduces this increase in deficit due to expansion. Option E

Answer 14:

Option A.

Recessionary Gap refers to the situation when aggregate demand is smaller than at the potential level of output.

So, Option A is the answer. Aggregate demand should be increased to eliminate it.

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