In the New Keynesian open economy model, government spending
A) is an ineffective stabilization tool with a flexible exchange rate, and an effective stabilization tool with a fixed exchange rate; prices are flexible.
B) is an effective stabilization tool with a flexible exchange rate, and an effective stabilization tool with a fixed exchange rate.
C) always requires the support of the central bank.
D) is an effective stabilization tool with a flexible exchange rate, and an ineffective stabilization tool with a fixed exchange rate.
E) is an ineffective stabilization tool with a flexible exchange rate, and an ineffective stabilization tool with a fixed exchange rate; net exports depends on the relative price of
Foreign goods to domestic goods.
Correct Answer:
Verified
Q8: A flexible exchange rate is determined by
A)buying
Q9: In the monetary small open-economy model with
Q10: In the monetary small open-economy model with
Q11: In the monetary small open-economy model with
Q12: In the New Keynesian open economy model,
Q14: The real exchange rate is the
A)domestic currency
Q15: In the monetary small open-economy model with
Q16: The balance of payments is zero
A)only if
Q17: In response to a temporary change in
Q18: In the New Keynesian open economy model
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