Which of the Following Is a Correct Statement About the Effects

question 23

Multiple Choice

Which of the following is a correct statement about the effects of monetary and fiscal policies?

• A) Monetary policy is effective under a fixed exchange rate regime, but not under flexible rates.
• B) A monetary shock will shift the aggregate demand curve in the same direction, whether exchange rates are fixed or flexible.
• C) A real shock will shift the aggregate demand curve under fixed but not flexible exchange rates.
• D) Monetary policy can always be used to correct real shocks, whether exchange rates are fixed or flexible.

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Definitions:

Oxidation Number

A number assigned to an element in chemical combination which represents the number of electrons lost or gained by an atom of that element in the compound.

Compound

A substance made up of atoms of two or more different elements chemically bonded together.

Oxidation Number

A number that represents the total number of electrons an atom either gains or loses in order to form a chemical bond with another atom.

Ca

Chemical symbol for Calcium, a reactive, soft metallic element that is a member of the alkaline earth metals.