Assume That Policy Makers Are Pursuing a Fixed Exchange Rate

question 51

Multiple Choice

Assume that policy makers are pursuing a fixed exchange rate regime.Assume that the economy is initially operating at the natural level (i.e.,Y = Yn) .Suppose fiscal policy makers increase taxes.This fiscal contraction will cause which of the following?

• A)the real exchange rate will be permanently higher in the medium run.
• B)the real exchange rate will be permanently lower in the medium run.
• C)the effects of this devaluation on the real exchange rate will be ambiguous in the medium run.
• D)the real exchange rate will be unchanged in the medium run.
• E)none of the above

Recognize the importance of formatting and the physical presentation of writing.

Acknowledge the utility and function of email features like Bcc and Cc in professional communication.

Gain insight into the historical evolution of business messages and current trends.

Understand the common factors impacting all forms of written communication.

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Definitions:

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Parent-Company Extension Method

An accounting approach used in consolidation, where the parent company's financial statements extend to include the subsidiary's transactions and balances.

Goodwill

Goodwill is an intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets.

NCI

Non-Controlling Interest, which refers to the equity in a subsidiary not attributable, directly or indirectly, to the parent company.