Under a floating exchange-rate regime with a low degree of capital mobility, a change in the exchange-rate value of domestic currency following expansionary fiscal policy will tend to
A. cause a deficit in the financial account.
B. decrease the country's holdings of official reserve assets.
C. deteriorate the current account.
D. give a trade-based stimulus to domestic production.
Answer: D
Economics
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A) is desirable to no one but ruled desirable by the court system nonetheless. B) everyone agrees is socially desirable. C) freely competitive markets have determined is socially desirable. D) the political process has determined is socially desirable.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
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