Author Question: For this question, assume that the economy is operating in a fixed exchange rate regime and that ... (Read 98 times)

bclement10 · **on:** Jun 30, 2018

For this question, assume that the economy is operating in a fixed exchange rate regime and that perfect capital mobility exists. Given this information, which of the following will occur?

A) The domestic and foreign interest rates must be equal.
B) The central bank cannot use monetary policy to affect domestic output.
C) An expansionary fiscal policy will require that the central bank increase the money supply.
D) all of the above
E) none of the above

Question 2

Discuss and explain what is meant by the state of technology.

What will be an ideal response?

tkempin · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

D

Answer to Question 2

The state of technology can be defined either narrowly or more broadly. In a narrow sense, it allows firms to convert resources into goods and services. A broader interpretation would allow it to include/take into account the organization of firms, the organization of markets, and so on.