If the Bank of Canada maintains a fixed exchange rate, which of the following effects will an expansionary fiscal policy have?
A) It will cause a large and permanent rightward shift in the AD curve.
B) It will cause a large and permanent leftward shift in the AD curve.
C) It will have no permanent effect on the position of the AD curve, but it will cause interest rates to rise.
D) It will have no permanent effect on either the position of the AD curve or the interest rate.
Correct Answer:
Verified
Q58: In a small open economy with perfect
Q120: If there is crowding out, which of
Q121: Assume that the MPC is 0.8. Assume
Q123: In a small open economy with a
Q124: For the following questions, consult the diagram
Q126: For the following questions, consult the diagram
Q127: If the Bank of Canada allows the
Q128: For the following questions, consult the diagram
Q129: For the following questions, consult the diagram
Q130: Suppose that the MPC is 0.50 and
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents