Which of the following are possible consequences when the government reduces government purchases to address an inflationary gap?
I. increase in the price of bonds
II. increase in net exports
III. decrease in the federal budget deficit (or increase the surplus)
IV. decrease in the exchange rate
A) I, II, III, and IV
B) I and III only
C) I, III, and IV only
D) II, III, and IV only
Correct Answer:
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Q120: Figure 12-3 Q122: Suppose the economy experiences an inflationary gap. Q123: Suppose the government increases government purchases and Q124: Contractionary fiscal policy will lead to a(n) Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents
A)
