In a Small Open Economy with a Floating Exchange Rate

question 6

Multiple Choice

In a small open economy with a floating exchange rate, an effective policy to decrease equilibrium output is to:

• A) decrease government spending.
• B) decrease taxes.
• C) increase the money supply.
• D) decrease the money supply.

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Definitions:

Central Nervous System

Comprises the brain and spinal cord, responsible for processing information and controlling most functions of the body and mind.

Rescorla

A reference to Robert A. Rescorla, a psychologist known for his work with Pavlovian conditioning, particularly concerning the role of cognitive processes in classical conditioning.

Electrical Stimulation

The use of electrical currents to stimulate nerves or brain regions for therapeutic purposes or in research to understand neural function.

Olds and Milner

Researchers known for their discovery of the brain's reward system through experiments involving electrical stimulation of the brains of rats.