If a Country Under a Fixed Exchange Rate Regime Wanted

question 49

Multiple Choice

If a country under a fixed exchange rate regime wanted to pursue contractionary policies, ceteris paribus,

• A)net exports would rise and capital inflows would fall, putting offsetting pressure on the exchange rate.
• B)net exports would fall and capital inflows would rise, putting offsetting pressure on the exchange rate.
• C)net exports and capital inflows would rise, and upward pressure would be placed on the exchange rate.
• D)net exports and capital inflows would fall, and downward pressure would be placed on the exchange rate.

---

Definitions:

Highly Credible Sources

Information sources that are widely regarded as accurate, reliable, and authoritative based on their origin, evidence, and context.

Attitude Change

A change in a person’s attitudes about some issue, person, or situation.

Low Levels

Conditions or quantities that are minor, reduced, or below average, often indicating a lack of intensity, severity, or concentration.

Five Factor Model

A personality model that suggests five broad dimensions are sufficient to describe human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.