Under a Fixed Exchange-Rate System and High Capital Mobility,an Expansionary

question 30

Multiple Choice

Under a fixed exchange-rate system and high capital mobility,an expansionary fiscal policy leads to a:

• A) Trade-account deficit and a capital-account surplus
• B) Trade-account deficit and a capital-account deficit
• C) Trade-account surplus and a capital-account surplus
• D) Trade-account surplus and a capital-account deficit

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Definitions:

Concurrent Validity

The degree to which the results of a particular test correlate with those of a previously established test or measure, assessed at the same time.

Discriminant Validity

The extent to which a measure does not correlate with other variables from which it is theoretically supposed to differ.

Interval Scale

A scale of measurement in which the intervals between numbers on the scale are all equal in size.

Ratio Scales

A type of measurement scale that has a true zero point and equal intervals, allowing for the comparison of absolute magnitudes of the numbers.