Under a Fixed Exchange Rate Regime, an Expansionary Fiscal Policy

question 77

Multiple Choice

Under a fixed exchange rate regime, an expansionary fiscal policy would ____ interest rates and GDP, which would cause ____ pressure on the exchange rate, forcing the monetary authority to undertake a(n) ______ monetary policy.

• A) raise; downward (appreciation); expansionary
• B) lower; upward (depreciation); contractionary
• C) raise; upward (depreciation); contractionary
• D) lower; downward (appreciation); expansionary

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Definitions:

Conventional Theory

In electrical engineering, it refers to the theory that assumes current flows from the positive to the negative terminal, opposite to electron flow.

Electrical Current Flow

The movement of electric charge carriers, such as electrons, through a conductor or circuit, typically measured in amperes.

Atomic Number

The number of protons in the nucleus of an atom, which determines the chemical properties of an element.

Number of Protons

A fundamental characteristic of an element that defines its identity in the periodic table, equal to the atomic number.