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

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Definitions:

Narcolepsy

Narcolepsy is a chronic sleep disorder characterized by overwhelming daytime drowsiness and sudden attacks of sleep, often leading to significant disruptions in daily life.

Hallucinates

The experience of sensing things that are not present in the external environment as if they are real, often a symptom in psychological disorders.

Sleep Attacks

Sudden and irresistible episodes of sleep occurring in disorders such as narcolepsy, characterized by excessive daytime sleepiness.

Animal Magnetism

A historical term referring to a supposed invisible natural force possessed by all living things, including humans, thought to affect health and disease.