In an Open Economy with Flexible Exchange Rates, Monetary Policy

question 101

Multiple Choice

In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the ________ and affects net exports by changing the ________.

• A)inflation rate; unemployment rate
• B)exchange rate; real interest rate
• C)growth of domestic real GDP; growth of foreign real GDP
• D)real interest rate; exchange rate

---

Definitions:

Self-Efficacy Beliefs

Beliefs people have about their ability to successfully perform a specific task.

Performance Mastery

The process or act of acquiring complete knowledge or skill in a particular area or activity, leading to high levels of performance.

Verbal Persuasion

The act of using spoken words to convince or influence someone to believe or do something.

Physiological State

The condition of the body's normal biological functions at a given time, influenced by factors like genetics, age, and environmental conditions.