In a Small Open Economy with a Flexible Exchange Rate

question 102

Multiple Choice

In a small open economy with a flexible exchange rate, what will an expansionary fiscal policy cause?

• A) It will cause the dollar to depreciate.
• B) It will cause net exports to rise.
• C) It will cause an additional investment accelerator effect.
• D) It will cause a reduction in the demand for Canadian-produced goods.

---

Definitions:

Eustress

Positive stress that has beneficial effects on health, motivation, performance, and emotional well-being.

Death Rate

The statistical measure of the number of deaths per unit of population, typically expressed per 1,000 or 100,000 people per year.

Younger Residents

Individuals who are relatively new or younger compared to others within a specific community or residential area.

Better Health

An improved state of physical, mental, and social well-being beyond the mere absence of disease or infirmity.