In Response to a Temporary Change in Total Factor Productivity

question 52

Multiple Choice

In response to a temporary change in total factor productivity, the adoption of capital controls under a flexible exchange rate

• A)amplifies the effect of this disturbance on both domestic output and the nominal exchange rate.
• B)dampens the effect of this disturbance on domestic output and amplifies the effect on the nominal exchange rate.
• C)dampens the effect of this disturbance on both domestic output and the real exchange rate.
• D)dampens the effect of this disturbance on both domestic output and the nominal exchange rate.
• E)amplifies the effect of this disturbance on domestic output and dampens the effect on the nominal exchange rate.

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Definitions:

Distance

A measurement of the space between two points, often discussed in the context of physical space but also applicable in abstract senses.

Retinal Image

The image projected onto the retina, the light-sensitive tissue at the back of the eye, which allows one to see.

Approaching Object

An object that is moving closer to the observer, often studied in psychology and neuroscience to understand perception and reaction to stimuli.

Motion

The act, process, or instance of changing place or position.