What is the main reason why monetary policy has a stronger effect in an open economy than in a closed economy?
a. Changes in the price level affect net exports.
b. Changes in the price level affect exchange rates.
c. Changes in exchange rates affect output.
d. Changes in the interest rate affect exchange rates which, in turn, affect net exports.
e. Changes in exchange rates affect the interest rate which, in turn, affects net exports.
D
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The National Industrial Recovery Act essentially legalized
a. labor unions. b. business cartels. c. minimum wage laws. d. import tariffs.
Suppose that the market price of good A equals the firm's cost of producing that good, but it does not reflect any costs imposed on society. Which of the following is FALSE?
A) The good is priced too low. B) An external benefit is associated with good A. C) Resources are over-allocated in the production of good A. D) Too much of good A is being produced.
An increase in the productivity of labor induces
A. an increase in the cost of labor. B. a firm to offer a higher wage for workers since the workers are now more productive. C. an increase in the demand for labor. D. a firm to hire fewer workers since fewer workers are needed with the increase in productivity.
In the short-run, demand-pull inflation increases:
A. Real wages, but in the long run only nominal wages B. Nominal wages, but in the long run only real wages C. Real output and the price level, but in the long-run only real output D. Real output and the price level, but in the long-run only the price level