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:

Political Opinions

The specific beliefs or attitudes that individuals hold regarding politics and government policies.

Revolving Door

A term describing the movement of personnel between roles as legislators and regulators and the industries affected by the legislation and regulation.

Conservative Charge

An action or movement typically initiated by conservative figures or parties aiming to promote traditional values or resist progressive reforms.