Figure 36-6 ​

question 119

Multiple Choice

Figure 36-6
​
-In Figure 36-6, an expansive monetary policy in a closed economy results in an equilibrium at point E.In our open economy, allowing for the induced change in the currency exchange rate, the final equilibrium will be at a point like

• A)B.
• B)F.
• C)J.
• D)H.

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Definitions:

Bushel

A measure of volume that is used primarily in agriculture, equal to about 35.24 liters in the USA.

Absolute Advantage

The ability of an entity to produce a good or offer a service at a lower cost per unit, using fewer resources, than competitors or another entity.

Specialization And Trade

The practice where individuals or entities focus on the production of specific goods or services to trade for other goods or services rather than producing everything they need by themselves.

Terms Of Trade

The ratio of an index of a country's export prices to an index of its import prices.