Under a fixed exchange rate system, an expansionary fiscal policy is
A) more effective in an open economy than in a closed economy.
B) less effective in an open economy than in a closed economy.
C) equally effective in an open economy and in a closed economy.
D) marginally effective in an open economy and completely ineffective in a closed economy.
A
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A downward shift of the planned expenditure curve resulting from an increase in the price level corresponds to
A) a movement up along the aggregate demand curve. B) a movement down along the aggregate demand curve. C) an increase in aggregate demand. D) a decrease in aggregate demand.
This Application refers to quantitative easing, a policy that occurs when the Fed
A) changes the reserve requirement. B) purchases long-term securities. C) raises the discount rate. D) sells mortgage-backed securities.