In a Situation of Flexible Exchange Rates and Where the BP

question 20

Multiple Choice

In a situation of flexible exchange rates and where the BP curve is steeper than the LM curve,

• A) monetary policy is less effective in raising national income than would be the case Under fixed exchange rates.
• B) expansionary fiscal policy will be more effective in raising the level of national Income than would be the case under fixed exchange rates.
• C) expansionary fiscal policy will lead to an appreciation of the country's currency.
• D) the BP curve stays fixed in the same position irrespective of any shifts that occur in The IS and LM curves.

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Definitions:

Rehydrated

The process of restoring lost fluids and electrolytes in the body, often necessary after dehydration due to illness or exercise.

Bananas, Rice, Applesauce, Toast

Components of the BRAT diet, which is a simple, low-fiber diet recommended for individuals with gastrointestinal issues such as diarrhea.

Balanced Proportion

The harmonious arrangement or relationship of parts to each other or to the whole in terms of size, quantity, or degree.

Isotonic Dehydration

A condition where the body loses water and electrolytes in equal proportion, maintaining the osmolarity of the blood.