In a Small Open Economy with Perfect Capital Mobility, If

question 33

Multiple Choice

In a small open economy with perfect capital mobility, if the Bank of Canada chooses to fix the value of the Canadian dollar, what will a contractionary monetary policy do?

• A) It will have no effect.
• B) It will shift the AD curve to the left.
• C) It will shift the AD curve to the right.
• D) It will shift both the AD curve and the short-run AS curve to the left.

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Definitions:

Kleptomania

A psychiatric disorder characterized by an irresistible urge to steal items not needed for personal use or monetary value.

Bulimic

Pertaining to bulimia nervosa, an eating disorder characterized by episodes of binge eating followed by compensatory behaviors such as vomiting or excessive exercise.

Physical and Sexual Abuse

Harmful physical actions and sexual misconduct inflicted upon one individual by another.

Anorexics

Individuals who suffer from anorexia nervosa, an eating disorder characterized by an obsessive fear of gaining weight and severely restricted food intake.