Assume That There Is a Simultaneous Tax Cut and Monetary

question 49

Multiple Choice

Assume that there is a simultaneous tax cut and monetary contraction. In a flexible exchange rate regime, we know with certainty that:

• A) the exchange rate would increase.
• B) the exchange rate would increase and output would decrease.
• C) the exchange rate would decrease and output would increase.
• D) the exchange rate and output would both increase.
• E) the exchange rate would increase and output would remain unchanged.

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Definitions:

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A piece of information attached to a product that provides details about its origin, maker, components, and use instructions.

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A stock-keeping unit, a unique identifier for each distinct product and service that can be purchased.

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Universal Product Code; a barcode symbol that identifies products uniquely for retail.