Suppose there are two countries that are identical in every way with the following exception. Country A is pursuing a fixed exchange rate regime and country B is pursuing a flexible exchange rate regime. Suppose taxes are increased in both countries rises by the same amount. Given this information, we know that
A) the change in output in A will be greater than in B.
B) the change in output in B will be greater than in A.
C) the change in output will be the same in both countries.
D) the relative output effects are ambiguous.
A
Economics
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a. $10,000 b. $40,000 c. $50,000 d. $200,000
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