In a Small Open Economy with a Flexible Exchange Rate

question 31

Multiple Choice

In a small open economy with a flexible exchange rate, a monetary injection causes which of the following?

• A)It causes the dollar to appreciate.
• B)It causes net exports to decline.
• C)It causes an additional decrease in demand for Canadian-produced goods that is not realized in a closed economy.
• D)It causes a shift of the aggregate demand curve farther to the right than in a closed economy.

Understand the economic and technological advancements in the 1990s and their impacts.

Comprehend the influence and outcomes of political elections and decisions in the late 20th and early 21st centuries.

Recognize the role of terrorism and the U.S. response in shaping both domestic and international policies.

Analyze the reasons behind U.S. diplomatic recognitions and military interventions in foreign countries.

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Definitions:

Debt-to-equity Ratio

A measure of how a company's assets are financed, comparing the roles of shareholder equity and debt.

Return on Equity

A metric indicating financial success determined by dividing a company's net income by its shareholders' equity, demonstrating the efficacy of using investments to create increased profits.

Net Profit Margin

A financial metric that shows the percentage of revenue that remains as profit after all operating expenses, interest, taxes, and preferred stock dividends are deducted.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.