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Macroeconomics

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Moderate

Expansionary Policy and Exports

MACRO-GEV9HS

Assume a flexible exchange rate regime and cyclical unemployment.

Which of the following policy combinations is most likely to lower unemployment and to stimulate exports?

A

Lower income taxes and raise government expenditures.

B

Raise government expenditures and increase the money supply.

C

Increase the money supply, and have equal increases in government expenditures and income taxes.

D

Decrease the money supply and increase government expenditures.