In an Open Economy with Few Capital Restrictions and Substantial

question 20

Multiple Choice

In an open economy with few capital restrictions and substantial import-export trade,a rise in interest rates and a decline in the producer price index of inflation will

• A) raise the value of the currency
• B) lower the nominal interest rate
• C) increase the volume of trading in the foreign exchange market
• D) lower the trade-weighted exchange rate
• E) increase consumer inflation.

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