In a Small Open Economy with a Floating Exchange Rate

question 80

Multiple Choice

In a small open economy with a floating exchange rate, if the government adopts an expansionary fiscal policy, in the new short-run equilibrium:

• A) income and the exchange rate will both rise.
• B) the exchange rate will rise, but income will remain unchanged.
• C) income will rise, but the exchange rate will remain unchanged.
• D) both income and the interest rate will rise.

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Definitions:

Productivity Improvement

Strategies or activities aimed at increasing the efficiency and effectiveness of a production process or workforce to yield higher outputs.

Quality Improvement

A systematic approach to making changes in processes, systems, or services to enhance their effectiveness, efficiency, or safety, often based on specific methodologies like Lean or Six Sigma.

Group Meetings

Gatherings of individuals or teams, usually within a work or organizational context, meant to discuss issues, make decisions, or provide information and updates.

Labor-Management Partnership

Collaborative efforts between a company's management and its labor force to increase productivity and competitiveness through shared decision-making.