For this question, assume that there is a simultaneous tax ...

[123654777]

For this question, assume that there is a simultaneous tax increase and monetary expansion. In a flexible exchange rate regime, we know with certainty that
 
  A) the exchange rate and output would both increase.
  B) the exchange rate would increase and output would decrease.
  C) the exchange rate would decrease.
  D) the exchange rate would decrease and output would increase.
  E) none of the above

Question 2

Which of the following will cause a reduction in output per worker (Y/N)?
 
  A) a reduction in the capital stock (K)
  B) a reduction in the saving rate
  C) a reduction in K/N
  D) all of the above

[underwood14]

Answer to Question 1

C

Answer to Question 2

D

[123654777]

Excellent

[juliaf]

TYSM