In a Small Open Economy with Perfect Capital Mobility, If

question 64

Multiple Choice

In a small open economy with perfect capital mobility, if exchange rates are fixed, how could aggregate demand be increased?

• A) by increasing government expenditures
• B) by increasing tax rates
• C) by increasing the money supply
• D) by decreasing the money supply

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Definitions:

Inventory Turnover

A measure of how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

In-progress Inventory

Items that are currently being manufactured or are in the process of being transformed from raw materials to finished goods.

Finished Goods Inventory

An end item ready to be sold, but still an asset on the company’s books.

Raw Materials

Basic materials that are processed or refined to create a final product in manufacturing.