Suppose You Were Told That Net Exports Had Become More

question 50

Multiple Choice

Suppose you were told that net exports had become more sensitive to changes in GDP. In that case, you would expect that

• A) monetary policy had become less effective in stabilizing GDP in the short run.
• B) monetary policy had become more effective in stabilizing GDP in the long run.
• C) monetary policy had become less effective in stabilizing GDP in the long run.
• D) monetary policy had become more effective in stabilizing GDP in the short run.
• E) b and d.

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Definitions:

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Traditional Communications Model

A theoretical framework that illustrates how information is transmitted from a sender to a receiver through a medium, involving encoding, channel selection, decoding, and feedback.

Second-order Response

The reaction or response to an action that is influenced by the initial reaction or outcome, indicating a more complex or indirect effect.

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