The Monetary Transmission Mechanism in an OPEN Economy Is More

question 61

Multiple Choice

The monetary transmission mechanism in an OPEN economy is more complicated than it is in a closed economy because the effects of domestic monetary contraction or expansion are

• A)strengthened because domestic interest rates must be equal to those in the rest of the world.
• B)weakened because changes in autonomous expenditure cause monetary effects that influence interest rates in the rest of the world.
• C)strengthened because changes in autonomous expenditure cause monetary effects that influence interest rates in the rest of the world.
• D)strengthened because changes in the domestic money supply cause changes in the exchange rate,which then reinforce the changes in desired investment.
• E)weakened because changes in the domestic money supply cause changes in the exchange rate which then offset the changes in desired investment.

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Definitions:

Prophase

The first stage of cell division in both mitosis and meiosis, where chromosomes condense and the nuclear envelope breaks down.

S Phase

refers to the phase of the cell cycle in which DNA is replicated, occurring between the G1 and G2 phases.

Telophase

The final stage of mitosis or meiosis in cell division when chromosomes de-condense, nuclear membranes re-form, and the cytoplasm typically divides, resulting in two separate cells.

Interphase

A phase of the cell cycle where a cell spends most of its life, preparing for cell division by replicating its DNA and increasing in size.