In Response to a Temporary Change in Total Factor Productivity

question 48

Multiple Choice

In response to a temporary change in total factor productivity, the adoption of capital controls under a fixed exchange rate

• A) amplifies the effect of this disturbance on both domestic output and the domestic nominal money supply.
• B) amplifies the effect of this disturbance on domestic output and dampens the effect on the domestic nominal money supply.
• C) dampens the effect of this disturbance on domestic output and amplifies the effect on domestic nominal money supply.
• D) dampens the effect of this disturbance on both domestic output and the domestic nominal money supply.
• E) dampens the effect of this disturbance on both domestic output and the real exchange rate.

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