Suppose There Are Two Countries That Are Identical in Every

question 32

Multiple Choice

Suppose there are two countries that are identical in every way with the following exception. Country A is pursuing a fixed exchange rate regime and country B is pursuing a flexible exchange rate regime. Suppose taxes are increased in both countries and rise by the same amount. Given this information, we know that:

• A) the change in output in A will be greater than in B.
• B) the relative output effects are ambiguous.
• C) the relative output effects depend on relative prices.
• D) the change in output will be the same in both countries.
• E) the change in output in B will be greater than in A.

---

Definitions:

Audio File

A digital file format used to store sound recordings.

Groove Music

A digital music streaming service and application developed by Microsoft, allowing users to listen to a library of songs and manage their own music collections.

Multiple Versions

Having several different versions of a document, software, or system, often saved or managed for backup, testing, or development purposes.

Start Menu

The primary menu in Windows operating systems that provides access to programs, folders, and system settings.