In the Monetary Small Open-Economy Model with a Flexible Exchange

question 7

Multiple Choice

In the monetary small open-economy model with a flexible exchange rate, an increase in the world real interest rate

• A) increases domestic output and increases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
• B) increases domestic output and decreases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
• C) decreases domestic output and increases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
• D) decreases domestic output and decreases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
• E) increases domestic output and the nominal exchange rate as long as real money demand is much less responsive to real income than the real interest rate.

Ascertain how modernity entails urbanization, expansion of formal rationality, and shifts towards a money economy.

Appreciate the critique of postmodernism by theorists like Jurgen Habermas.

Understand the concept of distanciation and its importance to modernity.

Recognize Charles Taylor’s contribution to understanding modern institutions and social imaginaries.

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Definitions:

Humanistic Psychologists

Psychologists that emphasize the study of the whole person, and believe that individuals seek to grow psychologically and continuously enhance themselves.

Social Obligations

Duties or responsibilities to others that arise from societal norms and expectations.

Destructive Behaviors

Actions that are harmful or damaging to oneself or others, often stemming from negative emotions or psychological distress.

Humanistic Theorists

Psychologists who focus on individual potential and stress the importance of growth and self-actualization.