Show transcribed image textAnswer: 1. T. During a recession, both demand and supply decreases, resulting in unemployment and decreasing disposable income. 2. T. During a recession, government needs to increase spending inorder t…View the full answerTranscribed image text: Section A. TRUE/FALSE QUESTIONS _(0.5 mark x 20) Write ‘T’ if the statement is true and ‘F’ if the statement is false in the respective boxes below. Question No 1 (T or F) 1. When a country faces a recession, the economy will most likely experiences falling employment and falling income. 2. If the economy is going into a recession, an appropriate fiscal policy is to decrease government spending. 3. An expansionary fiscal policy increases aggregate demand and increases real GDP. 4. A monetary policy is a policy that deals with government’s income and expenditure. 5. Saudi Arabia Monetary Agency (SAMA) can conduct an expansionary monetary policy by lowering the reserve requirement. 6. Automatic stabilizers are a type of monetary policy that happen automatically and tend to offset fluctuations in economic activity without direct intervention from policymakers. 7. Government budget deficit occurs when government expenditure is more than government revenue. 8. Crowing-out effect refers to the additional shifts in aggregate demand curve that result when fiscal policy increases income and thereby decreases consumer spending. 9. Government intervention to increase the value of the Saudi Riyal is called revaluation. 10. Both closed economies and open economies interact freely with other economies around the world.
