Suppose That Net Exports Were to Become More Sensitive to Changes

question 32

Multiple Choice

Suppose that net exports were to become more sensitive to changes in the interest rate. You would expect to see

• A) both fiscal and monetary policy become more effective.
• B) both fiscal and monetary policy become less effective.
• C) monetary policy become more effective and fiscal policy become less effective.
• D) fiscal policy become more effective and monetary policy become less effective.
• E) fiscal policy become more effective without any change in the effectiveness of monetary policy.

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Definitions:

Military Advisers

Personnel from the armed forces sent to assist or train the military of other nations without being directly involved in combat operations.

Army-McCarthy Hearings

A series of Congressional hearings in 1954 where Senator Joseph McCarthy's claims of Communist infiltration in the U.S. Army were investigated, leading to his eventual censure.

McCarthy's Rantings

Refers to the careless and aggressive accusations made by Senator Joseph McCarthy during the 1950s, particularly against alleged communists in the U.S.

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment, used as an indicator of the health of an economy.