Because of NAFTA, the U.S. shifts some of its imports from Europe to Mexico (a member of NAFTA). This is an example of

Distinguish between fixed and flexible exchange rate systems

What will be an ideal response?

According to the quantity theory of money, in the long run

A) an increase in the quantity of money creates an increase the price level but no increase in real GDP. B) the quantity of money in the economy will always be just the right amount. C) an increase in the quantity of money creates an increase in the price level and in real GDP. D) None of the above answers are correct.