Which of the Following Statements Is Accurate

question 12

Multiple Choice

Which of the following statements is accurate?

• A)Fiscal policy is not effective with fixed exchange rates in an environment of highly responsive international capital flows.
• B)Fiscal policy is highly effective with fixed exchange rates and unresponsive international capital flows.
• C)Fixed exchange rates greatly constrain a country's ability to pursue an independent monetary policy.
• D)Contractionary monetary policy is effective under a fixed exchange rate regime.

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Definitions:

Perfect Competition

A market structure characterized by a large number of small firms, homogeneous products, and free entry and exit, leading to price-taking behavior.

Standardized Product

Output of different producers regarded by consumers as the same good; also referred to as a commodity.

Easy Entry And Exit

Characteristics of a market where companies can freely enter or leave without significant barriers or costs.

Patented Prescription Drug

A medication that is protected by a patent, giving its manufacturer the exclusive right to produce and sell the drug for a certain period.