Given an Open Economy with High Capital Mobility,all of the Following

question 16

Multiple Choice

Given an open economy with high capital mobility,all of the following statements are true except:

• A) fiscal policy is strengthened under fixed exchange rates
• B) monetary policy is weakened under fixed exchange rates
• C) monetary policy is strengthened under floating exchange rates
• D) fiscal policy is strengthened under floating exchange rates

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Definitions:

Income-Producing

Refers to assets or activities that generate earnings, profit, or revenue.

Real Property

Land and anything permanently attached to it, including buildings and structures, classified legally as immovable.

Principle

A fundamental truth or proposition that serves as the foundation for a system of belief or behavior.

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage of the principal.