In an Open Economy Under Flexible Exchange Rates,a Reduction in the Interest

question 31

Multiple Choice

In an open economy under flexible exchange rates,a reduction in the interest rate will cause a reduction in which of the following?

• A)investment
• B)the exchange rate, E
• C)net exports
• D)all of the above
• E) none of the above

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Definitions:

Pronator Teres

A muscle in the forearm that helps in pronating the wrist by turning the palm downward.

Masseter

A facial muscle that plays a major role in the chewing of solid foods, connecting the jawbone to the cheekbone.

Digastric

A small muscle located under the jaw that plays a role in the opening of the mouth and the depression of the mandible.

Gastrocnemius

A large muscle located in the back part of the lower leg, forming part of the calf and responsible for flexing the foot and bending the knee.