In Considering the Slope of the Open-Economy Aggregate Demand Curve

question 17

Multiple Choice

In considering the slope of the open-economy aggregate demand curve (AD) , a valid general statement is that, other things equal, the open-economy AD __________.

• A) will tend to be flatter with flexible rates than with fixed rates
• B) will tend to be steeper with flexible rates than with fixed rates
• C) will necessarily have the same slope with flexible rates as with fixed rates
• D) will tend to be flatter or steeper, or will necessarily have the same slope, with flexible rates as with fixed rates - cannot be determined without more information.

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