How is the impact of expansionary monetary policy different in an open economy than in a closed economy?
What will be an ideal response?
In an open economy, the lower interest rate resulting from expansionary monetary policy will affect not only consumption and domestic investment, but it will also affect net exports and net capital flows. Lower interest rates will decrease capital inflows and increase capital outflows, resulting in a decrease in the exchange rate (when stated in terms of foreign currency per domestic currency) which will increase net exports. The result is that monetary policy has a stronger effect in an open economy than in a closed economy.
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Increases in real GDP since 1900 can actually underestimate growth in the standard of living for Americans since 1900 because
A) the crime rate was higher in 1900 than it is today. B) goods and services are more expensive today as compared to 1900. C) the quality of health care that exists today was not available in 1900. D) the level of pollution in 1900 was much higher than it is today.
Why is marginal revenue less than price for a monopolist?
What will be an ideal response?