Under a Fixed Exchange Rate Regime,contractionary Fiscal Policy Will Tend

question 30

Multiple Choice

Under a fixed exchange rate regime,contractionary fiscal policy will tend to cause which of the following?

• A)a reduction in imports
• B)a reduction in net exports
• C)an increase in investment
• D)all of the above

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Definitions:

Equivalent Annual Cost

Equivalent Annual Cost is a financial analysis tool used to compare the cost efficiency of two or more investment options by transforming their costs into an annualized format.

Operating Cost

Expenses associated with the day-to-day functions of a business or organization, excluding costs related to production or acquisition of goods.

Required Rate of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular venture or investment.

Operating Cash Flow

A measure of the cash generated by a company's regular operational activities over a specific period.