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

question 54

Multiple Choice

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

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

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Definitions:

Average Variable Cost

The variable cost of production divided by the quantity produced, showing the cost of producing each additional unit.

Average Total Cost

The total cost of production divided by the number of units produced, representing the per-unit cost of production for a firm.

Rising

An increase or upward trend in value, quantity, or importance.

Average Variable Cost

The total variable cost divided by the number of units produced, representing the variable cost per unit of output.