What does the open-economy macroeconomic model take as given?
A) GDP, but not the price level
B) the price level, but not GDP
C) both the price level and GDP
D) the exchange rate

Question

Quizplus · Accepted Answer

The open-economy macroeconomic model takes both the price level and GDP as given, as well as the exchange rate. This is because the model focuses on the interaction between the domestic economy and the global economy, which is influenced by both prices and output levels. The exchange rate is also a crucial factor in determining the competitiveness of the domestic economy in the global market. Therefore, all three variables are considered important in the open-economy macroeconomic model.

What Does the Open-Economy Macroeconomic Model Take as Given