In a Small Open Economy with a Flexible Exchange Rate

question 80

Multiple Choice

In a small open economy with a flexible exchange rate, what does a monetary contraction by the Bank of Canada cause?

• A) the dollar to depreciate
• B) net exports to fall
• C) an additional increase in demand for Canadian-produced goods that is not realized in a closed economy
• D) a shift of the aggregate demand curve further to the right than in a closed economy

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Definitions:

Medication

Substances used for medical treatment, especially pharmaceutical drugs.

Hallucinations

Perceptions in the absence of an external stimulus that have qualities of real perception, often experienced in sight or sound.

Neurocognitive Disorder

A category of mental health disorders that primarily affect cognitive functions such as memory, problem solving, and attention.

China

A country in East Asia, known for its vast history, rich culture, and significant influence on art, science, and technology globally.