In the New Keynesian open economy model, government spending
A) is an effective stabilization tool with a flexible exchange rate, and an ineffective stabilization tool with a fixed exchange rate
B) is an ineffective stabilization tool with a flexible exchange rate, and an effective stabilization tool with a fixed exchange rate; prices are flexible.
C) is an ineffective stabilization tool with a flexible exchange rate, and an ineffective stabilization tool with a fixed exchange rate; net exports depends on the relative price of foreign goods to domestic goods.
D) is an effective stabilization tool with a flexible exchange rate, and an effective stabilization tool with a fixed exchange rate.
B
You might also like to view...
The liquidity effect is the
A) increase in the interest rate brought on by an increase in GDP. B) increase in the interest rate due to a higher expected inflation rate. C) decrease in the interest rate due to an increase in the supply of loanable funds. D) response, in terms of rate of flow, of the money supply to a change in government spending. E) rate of change in the price level caused by a change in the supply of money.
Why might a firm pay a celebrity to endorse its product?
What will be an ideal response?
Inflation tends to ________ during the expansion phase of the business cycle and ________ during the recession phase of the business cycle
A) increase; decrease B) decrease; increase C) decrease; decrease further D) increase; increase further
In the United States, the average person mostly patronizes firms that operate in
A) perfectly competitive markets. B) monopolistically competitive markets. C) oligopolies. D) monopolies.