Changes in the Money Supply in an Open Economy,as Compared

question 12

Multiple Choice

Changes in the money supply in an open economy,as compared to a closed economy,

• A)are likely to have a greater effect on AD because of the secondary effect that exchange rates have on exports.
• B)are likely to have a smaller effect on AD because the secondary effect of exchange rates will offset the changes created by monetary disturbances.
• C)are the same in either situation.
• D)affect investment to a greater degree because foreign investors can create new investment in an open economy.
• E)cannot be determined with the available information.

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Definitions:

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The origins from which individuals or organizations obtain social support, norms, or influences.

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A concept in social psychology concerning the fair allocation of resources among diverse members of a community.

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The process of defining specific, measurable, achievable, relevant, and time-bound objectives that motivate and direct action.