Under a System of Flexible Exchange Rates and Perfect Capital

question 9

Multiple Choice

Under a system of flexible exchange rates and perfect capital mobility, restrictive monetary policy will in the long run

• A)lower inflation and the nominal exchange rate, while leaving real output, relative prices, and the real exchange rate the same
• B)increase the real interest rate
• C)lower inflation, the exchange rate, and the real interest rate
• D)leave output the same, while lowering the real interest rate and the real exchange rate
• E)reduce real money balances, domestic prices, and the real exchange rate

---

Definitions:

Gross Profit Rate

A financial metric that indicates the percentage of revenue that exceeds the cost of goods sold.

Cost Of Goods Sold

Expenses explicitly tied to the production of a company's sold goods, comprising costs of materials and labor.

Net Sales

Total sales revenue minus returns, allowances, and discounts, representing the actual revenue earned from sales.

Gain On Sale

The profit that is realized from the sale of an asset or investment, which exceeds the purchase price.