All Else Equal, Compared to the Case of a Closed

question 129

Multiple Choice

All else equal, compared to the case of a closed economy, monetary policy is ________ effective in an open economy with a ________ exchange rate.

• A)more; fixed
• B)more; flexible
• C)less; real
• D)less; nominal

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Definitions:

Physiological Factors

Biological components that can affect the functioning of the body and influence health, such as genetics, hormone levels, and nutritional status.

Regressive Tax

At the individual level, a tax whose average tax rate decreases as the taxpayer’s income increases. At the national level, a tax for which the average tax rate (= tax revenue/GDP) falls as GDP rises.

Income Groups

Categories of individuals or households segmented by income levels, often used for statistical analysis and policy design.

Proportional Tax

At the individual level, a tax whose average tax rate remains constant as the taxpayer’s income increases or decreases. At the national level, a tax for which the average tax rate (= tax revenue/GDP) remains constant as GDP rises or falls.