Suppose a Country Switches from a Flexible to a Fixed

question 57

Multiple Choice

Suppose a country switches from a flexible to a fixed exchange rate. Which of the following will occur as a result of this change?

• A) Both fiscal and monetary policy will become more effective in changing GDP.
• B) A given change in government spending will now have a greater effect on output.
• C) Both fiscal and monetary policy will become completely ineffective in changing GDP.
• D) Monetary policy will become a more effective tool for changing output.
• E) A given change in government spending will now have a smaller effect on output.

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Definitions:

Independent Variables

Factors in an experiment that are manipulated to determine if they cause a change in the dependent variable.

Degrees Of Freedom

The sum of independent values or quantities that may be applied to a statistical distribution.

Factor A

Typically used in experimental design, referring to a controlled variable that is manipulated to observe its effect on an outcome.

Levels

Distinct values that a categorical variable can have. In experimental design, it also refers to the treatments or conditions to which subjects are assigned.