In Response to a Temporary Change in Total Factor Productivity,the

question 43

Multiple Choice

In response to a temporary change in total factor productivity,the adoption of capital controls under a flexible exchange rate

• A) amplifies the effect of this disturbance on both domestic output and the nominal exchange rate.
• B) amplifies the effect of this disturbance on domestic output and dampens the effect on the nominal exchange rate.
• C) dampens the effect of this disturbance on domestic output and amplifies the effect on the nominal exchange rate.
• D) dampens the effect of this disturbance on both domestic output and the nominal exchange rate.
• E) dampens the effect of this disturbance on both domestic output and the real exchange rate.

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