Which of the following statements is true?
A. Under floating exchange rates, external capital-flow shocks can have effects on internal balance by altering the exchange rate and the country's international price competitiveness.
B. Monetary policy is a powerful economic tool for a country with fixed exchange rates and high capital mobility.
C. An expansionary monetary policy tends to increase the exchange rate value of the domestic currency in the short run.
D. Fiscal policy for a country with floating exchange rates is more powerful with a high degree of capital mobility than with a low degree of capital mobility.
Answer: A
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Why will there be less crowding out of private spending by government spending the less sensitive consumption, investment, and net exports are to changes in interest rates?
What will be an ideal response?
The portion of the short-run aggregate supply that reflects the economy's resources are not fully employed is the:
A) vertical portion. B) horizontal portion. C) upward sloping portion. D) none of the above.