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

question 15

Multiple Choice

Under a fixed exchange-rate system and high capital mobility, other things equal an expansionary fiscal policy 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:

Mortgage Payment

A regular payment made to a lender by a borrower, typically to pay back a home loan.

Monthly Rent

The periodic payment made by a tenant to a landlord for the use of a property or space.

Historical Costs

Refers to the original monetary value of an asset or transaction, without adjusting for inflation or changes in purchasing power over time.

Irreversible Costs

Expenditures that cannot be recovered once they have been made, also known as sunk costs.