Under a floating exchange-rate regime with a high degree of capital mobility, in the short run an expansionary fiscal policy will most likely create pressure on
A. the domestic currency to appreciate.
B. monetary authorities to revalue the domestic currency.
C. monetary authorities to devalue the domestic currency.
D. the domestic currency to depreciate.
Answer: A
You might also like to view...
Because collective action problems are ________ to solve, society often ________
A) relatively easy; handles the problems itself B) relatively easy; ignores the problems C) impossible; chooses to live with the problems D) difficult; requests help from the government
Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?
a. The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. b. The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. c. The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. d. The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change.