The switch to flexible exchange rates in 1973 has made the effect of monetary policy on net exports a ________ important component of the monetary policy multiplier process,and thus has ________ the effectiveness lag.
A)more,lengthened
B)more,shortened
C)less,lengthened
D)less,shortened

Question

Quizplus · Accepted Answer

The switch to flexible exchange rates in 1973 has made the effect of monetary policy on net exports a more important component of the monetary policy multiplier process, as exchange rate changes can affect the competitiveness of a country's exports. This has lengthened the effectiveness lag, as changes in exchange rates may take time to fully impact net exports.

The Switch to Flexible Exchange Rates in 1973 Has Made