What Is the Correct Order of Events Following an Expansionary

question 51

Multiple Choice

What is the correct order of events following an expansionary fiscal policy with a fixed exchange rate?

• A)Interest rates rise,overall balance-of-payments may improve,money supply falls to defend fixed exchange rate
• B)Production and income rise,money supply falls to defend fixed exchange rate,capital flows in
• C)Interest rate rises,capital flows in,overall balance-of-payments may improve,money supply rises to defend fixed exchange rate
• D)Production and income rise,money supply falls to defend fixed exchange rate,overall balance-of-payments may improve

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Definitions:

Consistent Principle

A rule or standard that is applied uniformly and reliably over time or across situations, without contradictions.

Jointly Exhaustive

A set of options or propositions is considered jointly exhaustive when it covers all possible scenarios or outcomes, leaving no possibility unaddressed.

Mutually Exclusive

Describing two or more events or conditions that cannot occur or be true at the same time.

Consistent Principle

A concept or rule that remains uniform and unchanged across different contexts or situations, ensuring coherence and reliability in application.