Under a Floating Exchange Rate Regime with a Low Degree

question 27

Multiple Choice

Under a floating exchange rate regime with a low degree of capital mobility, if the domestic government uses an expansionary fiscal policy:

• A)the domestic interest rate increases.
• B)foreign capital inflows decrease domestic product.
• C)the financial account balance deteriorates.
• D)the official settlements balance tends to go into surplus.

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Definitions:

Symport

A type of transporter protein that moves two or more substances in the same direction across a cell membrane.

Antiport

A mechanism of membrane transport where two substances are moved in opposite directions across a cell membrane, usually by a protein transporter.

Uniport

A type of transporter in cell membranes that moves a single type of molecule in one direction across the membrane.

Embarrassment

A feeling of self-consciousness, shame, or awkwardness that occurs when private aspects of the self are exposed or when failing to meet social expectations.