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Assume Perfect Capital Mobility

question 19

Multiple Choice

Assume perfect capital mobility.Under a fixed exchange rate system,expansionary fiscal policy causes income to _____,while under flexible exchange rates expansionary fiscal policy causes income to _____.


Definitions:

Marginal Cost

The cost of producing one additional unit of a product, calculated by the change in total cost divided by the change in quantity.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output within a business.

Vertical Distance AB

A measure of the difference in height between two points, A and B, often used in mathematics and physics to determine the direct vertical separation.

Average Total Cost Curve

A graphical representation illustrating the cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

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