In a Small Open Economy with a Flexible Exchange Rate

question 77

Multiple Choice

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

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

---

Definitions:

Personality

The combination of emotional, attitudinal, and behavioral response patterns of an individual that characterizes their personal identity over time.

Psychoanalytic Theory

A theoretical framework developed by Sigmund Freud that emphasizes the importance of unconscious processes and childhood experiences in shaping personality and behavior.

Parental Moral Standards

The ethical beliefs and values that parents aim to instill in their children, often reflecting the parents' notions of right and wrong.

Anxiety

A mental health disorder characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.