The Monetary Transmission Mechanism in an OPEN Economy Is More

question 18

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)weakened because changes in autonomous expenditure cause monetary effects that influence interest rates in the rest of the world.
• B)strengthened because changes in autonomous expenditure cause monetary effects that influence interest rates in the rest of the world.
• C)strengthened because domestic interest rates must be equal to those 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:

Simple Cuboidal Epithelium

A type of epithelium that consists of a single layer of cells that are roughly square-shaped in section and are involved in secretion, absorption, and filtration.

Stratified Squamous Epithelium

A type of epithelial tissue composed of several layers of flat cells, designed to protect underlying tissues.

Gap Junction

Small channel between cells that allows the passage of ions and small molecules between cells; provides means of intercellular communication.

Hemidesmosomes

Structures that anchor cells to the underlying basement membrane, facilitating cell stability and structural integrity.