In a Small Open Economy with a Flexible Exchange Rate

question 102

Multiple Choice

In a small open economy with a flexible exchange rate, what will an expansionary fiscal policy cause?

• A) It will cause the dollar to depreciate.
• B) It will cause net exports to rise.
• C) It will cause an additional investment accelerator effect.
• D) It will cause a reduction in the demand for Canadian-produced goods.

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Definitions:

Observed Score

The actual score or value obtained from measuring or testing an individual's performance or trait.

Error Impact

Refers to the effect that inaccuracies in data or calculations can have on the results of a study or analysis.

Reliability Equation

A formula used to calculate the consistency or stability of scores obtained from tests measuring the same construct.

Reliability

Reliability refers to the consistency of a measure or instrument; a reliable instrument yields similar results under the same conditions over multiple trials.