In a Fixed Exchange Rate Regime,a Reduction in the Price

question 64

Multiple Choice

In a fixed exchange rate regime,a reduction in the price level will cause which of the following?

• A)a real appreciation and a leftward shift in the aggregate demand curve
• B)a real appreciation and no shift in the aggregate demand curve
• C)a real depreciation and a rightward shift in the aggregate demand curve
• D)a real depreciation and no shift in the aggregate demand curve
• E) no change in the real exchange rate, and no change in aggregate demand

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Definitions:

Isotope

Atoms of the same element that have different numbers of neutrons in their nuclei, leading to different atomic masses but the same chemical behavior.

Neutrons

Tiny particles located within an atom's nucleus, possessing no electrical charge and having a mass that is marginally higher than protons.

Isotope

Variants of an element that contain the same number of protons but different numbers of neutrons in their nuclei.

Neutrons

Subatomic particles, found in the nucleus of an atom, that have no electrical charge and a mass slightly larger than that of protons.