Given a System of Floating Exchange Rates, Other Things Equal

question 16

Multiple Choice

Given a system of floating exchange rates, other things equal an expansionary fiscal policy by the United States will cause

• A) the dollar to appreciate and will decrease U.S. net exports.
• B) the dollar to appreciate and will increase U.S. net exports.
• C) the dollar to depreciate and will increase U.S. net exports.
• D) the dollar to depreciate and will decrease U.S. net exports.

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Definitions:

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, leading to a learned response.

Conditioned Response

A learned reaction to a conditioned stimulus that occurs because of prior conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually triggers a conditioned response.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention.