Everything Else Remaining Unchanged, the Effect of Domestic Spending Shocks

question 56

Multiple Choice

Everything else remaining unchanged, the effect of domestic spending shocks on a country with a floating exchange rate differs depending on:

• A)whether sterilized intervention is used or not.
• B)the mobility of capital across countries.
• C)the current trade balance situation of the country.
• D)the interest rate differential between the country and its trading partners.