Under a Fixed Exchange-Rate System and High Capital Mobility, Other

question 71

Multiple Choice

Under a fixed exchange-rate system and high capital mobility, other things equal an expansion in the domestic money supply leads to a

• A) trade deficit and capital inflow.
• B) trade deficit and capital outflow.
• C) trade surplus and capital inflow.
• D) trade surplus and capital outflow.

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Definitions:

Real GDP

The calculation of a nation's economic production accounting for variations in prices, representing the actual value of all goods and services generated.

Nominal GDP

Nominal GDP refers to the market value of all final goods and services produced within a country in a given period, using current prices without adjusting for inflation.

Real GDP

Gross Domestic Product adjusted for inflation, giving an accurate measure of an economy's size and how it's growing over time.

GDP Deflator

A measure that reflects the prices of all domestically produced goods and services in an economy.