Suppose a Country Has Floated Its Currency and the Central

question 279

Multiple Choice

Suppose a country has floated its currency and the central bank sets a contractionary monetary policy. Which of the following is LIKELY to occur?

• A)The country's currency will depreciate.
• B)Interest rates will rise, the currency will appreciate, and any inflationary gap will shrink.
• C)Interest rates will fall, which will reduce aggregate demand.
• D)Net exports will be larger.

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Definitions:

Camouflaged Verb

A verb made less direct or hidden within a nominalization, making sentences less clear and more passive.

Canceled

Refers to something that has been annulled, terminated, or declared void; to revoke or call off an event, policy, or action.

Dinner

The main meal of the day, traditionally eaten in the evening or late afternoon.

Specific Words

Words that are distinct and precise in meaning, used to enhance clarity in communication.