Which One of the Following Statements Is the MOST Accurate

question 65

Multiple Choice

Which one of the following statements is the MOST accurate?

• A) Under a fixed exchange rate, central bank monetary tools are powerless to affect the economy's money supply.
• B) Under a flexible exchange rate, central bank monetary tools are powerless to affect the economy's money supply or its output.
• C) Under a fixed exchange rate, fiscal policy tools are powerless to affect the economy's money supply or its output.
• D) Under a fixed exchange rate, central bank monetary tools are powerless to affect the economy's money supply or its output.
• E) Under a dirty float exchange rate, central bank monetary tools are powerless to affect the economy's money supply or its output.

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Definitions:

Factor Of Production

An input used in the production of goods or services, including labor, capital, land, and entrepreneurship.

Complements

Goods or services that are used together such that an increase in the price of one causes a decrease in the demand for the other, like coffee and sugar.

Farming Production

The process and output involved in cultivating crops and livestock, contributing to the agricultural sector's overall productivity.

Wages And Rents

Payments made to workers for their labor and to property owners for the use of their property, respectively.