Under a Flexible Exchange Rate System, If a Country Wished

question 42

Multiple Choice

Under a flexible exchange rate system, if a country wished to pursue contractionary policies relative to the rest of the world,

• A)decreases in interest rates would lead to a capital outflow, partially offsetting the desired expansionary effect.
• B)increases in interest rates would lead to a capital inflow, partially offsetting the desired contractionary effect.
• C)decreases in interest rates would lead to a capital inflow, partially offsetting the desired contractionary effect.
• D)increases in interest rates would lead to a capital outflow, partially offsetting the desired expansionary effect.

---

Definitions:

RUPA

The Revised Uniform Partnership Act, legislation adopted by many states in the United States to govern the operation of partnerships.

Recognizes

To formally acknowledge or take notice of something, often legally or officially.

Partnership

A lawful business structure involving two or more people who divide both management responsibilities and earnings.

Entity

A unit, existence, or being that can be legally or conceptually distinct, such as a corporation, partnership, individual, or any organized group.