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:

Ribosomes

Molecular machines within cells where proteins are synthesized, following the instructions encoded in RNA.

mRNA

Messenger RNA, which carries genetic information from DNA to the ribosome, where it serves as a template for protein synthesis.

AUG Codon

The mRNA codon that signals the start of protein synthesis, typically coding for the amino acid methionine in eukaryotes and a modified methionine in prokaryotes.

Translation

The process by which the sequence of bases in mRNA is used to direct the sequential addition of amino acids, building polypeptide chains in protein synthesis.