If Exchange Rates Are Flexible and Capital Is Perfectly Mobile

question 30

Multiple Choice

If exchange rates are flexible and capital is perfectly mobile, money expansion will lead to

• A)an immediate adjustment in the exchange rate, but a gradual adjustment in prices
• B)an immediate change in competitiveness
• C)a decrease in interest rates and a capital outflow in the short run
• D)a proportionate increase in money, prices, and the exchange rate in the long run, leaving output and real money balances unchanged
• E)all of the above

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Definitions:

Divorce Rates

Statistical measures of the frequency of divorce within a defined population or area over a specific time period.

Delay Marriage

The decision or trend of postponing marriage until a later age than traditionally observed.

Set in Their Ways

Describes people who are resistant to change and prefer to stick to their established habits or opinions.

Less Likely

Having a smaller chance or probability of occurring or being true, often used in comparative assessments of risk or behavior.