If international trade and capital flows are small relative to the aggregate level of economic activity, monetary authorities may have ___________ latitude in the execution of policy.
A) more
B)less
C)about the same
D)no

Question

Quizplus · Accepted Answer

If international trade and capital flows are small relative to the overall economic activity, monetary authorities may have more latitude in the execution of policy because external factors will have a lesser impact on the domestic economy. Therefore, policy decisions can be made with fewer considerations for external influences.

If International Trade and Capital Flows Are Small Relative to the Aggregate