Given an economy with flexible prices, a description of domestic monetary policy can be expressed as to
A) maintain interest rates slightly above the world rate to create a reserve buffer.
B) maintain interest rates slightly below the world rate to reduce the opportunity cost of creating a reserve buffer.
C) keep the domestic price level equal to world prices expressed in terms of domestic currency through the exchange rate.
D) keep net exports equal to zero by manipulating the price level to move against the exchange rate.
E) keep the economy operating at full potential in the face of potentially large shifts in aggregate demand derived from random shocks to net exports.

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The Answer of Given an economy with flexible prices, a description of domestic monetary policy can be expressed as to
A) maintain interest rates slightly above the world rate to create a reserve buffer.
B) maintain interest rates slightly below the world rate to reduce the opportunity cost of creating a reserve buffer.
C) keep the domestic price level equal to world prices expressed in terms of domestic currency through the exchange rate.
D) keep net exports equal to zero by manipulating the price level to move against the exchange rate.
E) keep the economy operating at full potential in the face of potentially large shifts in aggregate demand derived from random shocks to net exports.

Given an Economy with Flexible Prices, a Description of Domestic