In the New Keynesian open economy model, if the exchange rate is fixed
A) fiscal policy and monetary policy are powerless.
B) fiscal policy is an effective stabilization tool.
C) a change in current total factor productivity increases output.
D) monetary policy is an effective stabilization tool.
Question 2
An increase in the general level of prices will tend to cause, other things the same ________.
A) an increase in the real value of assets
B) an increase in the real value of liabilities
C) no change in the real value of liabilities
D) a decrease in the real value of liabilities
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