For This Question,assume That the Economy Is Operating in a Fixed

question 58

Multiple Choice

For this question,assume that the economy is operating in a fixed exchange rate regime and that perfect capital mobility exists.Given this information,which of the following will occur?

• A)the domestic and foreign interest rates must be equal.
• B)the central bank cannot use monetary policy to affect domestic output.
• C)an expansionary fiscal policy will require that the central bank increase the money supply.
• D)all of the above
• E)none of the above

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Definitions:

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a company.

AVC

Average Variable Cost, which refers to the total variable cost per unit of output in a business, where variable costs change with the level of production.

MC

Marginal Cost, the cost of producing one additional unit of a product or service.

ATC

Average Total Cost; the total cost of production divided by the number of units produced, representing the per-unit production cost.