ECONOMICS
BALANCE OF PAYMENTS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
A a devaluation of the currency
|
|
|
B a reduction in government spending
|
|
|
C the imposition of import quotas
|
|
|
D the removal of import tariffs
|
Detailed explanation-1: -In general, the federal government has two types of tools available to fight inflation. Monetary policy, conducted by the Federal Reserve, can raise interest rates. Or fiscal policy, controlled by the Congress and President, can adjust taxes and spending.
Detailed explanation-2: -Using fiscal policy to promote economic growth to increase tax revenue and decrease spending can decrease a deficit.
Detailed explanation-3: -Quantitative easing, cutting tax rates, lowering interest rates, open market operations, lowering bank reserve limits, increasing spending by the Government are the ways in which deflation can be controlled.
Detailed explanation-4: -This is called expansionary monetary policy. 8. During times of inflation, by raising taxes or decreasing government spending, fiscal policy attempts to decrease consumer spending and business investment, which should lead to a decrease in aggregate demand and a decrease in real GDP, the price level, and employment.