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:

General Health

A broad term referring to the overall physical and mental condition and well-being of an individual or population.

Unsystematic Risk

The risk of price change due to the unique circumstances of a specific security, as opposed to the overall market.

Stocks

Shares of ownership in a corporation, giving holders a claim to part of the company's assets and profits.

Bonds

Debt securities issued by entities, such as corporations or governments, to raise funds, promising to repay the face value plus interest.