In a Small Open Economy with a Floating Exchange Rate

question 33

Multiple Choice

In a small open economy with a floating exchange rate, the exchange rate will appreciate if:

• A)the money supply is increased. the
• B)money supply is decreased.
• C)government spending is decreased.
• D)taxes are decreased.

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Definitions:

Test Statistic

A value calculated from sample data during hypothesis testing. It is used to determine whether to reject the null hypothesis.

Alternative Hypothesis

In hypothesis testing, the hypothesis that contradicts the null hypothesis, indicating there is an effect or a difference.

Test Statistic

An outcome obtained from samples in a hypothesis experiment, crucial in deciding if the null hypothesis should be dismissed.

P-value

Assuming the correctness of the null hypothesis, it is the possibility of obtaining test results that are equally or more extreme than those observed.