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Author Question: If the Fed increases the money supply to fight recession, a floating exchange rate will aid the Fed ... (Read 4746 times)

cdr_15

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Question 1

Monetary policies are


◦ less effective when the exchange rate is flexible and the economy is open.
◦ more effective when the exchange rate is flexible and the economy is open.
◦ more effective when the exchange rate is flexible and the economy is closed.
◦ less effective when the exchange rate is fixed and the economy is open.

Question 2

If the Fed increases the money supply to fight recession, a floating exchange rate will aid the Fed in fighting recession because


◦ as the money supply is increased, the interest rate will decrease, and the price of U.S. exports will rise and the price of U.S. imports will fall.
◦ as the money supply is increased, the interest rate will decrease, and the price of U.S. exports will fall and the price of U.S. imports will rise.
◦ as the money supply is increased, the interest rate will decrease, and the price of both U.S. exports and U.S. imports will fall.
◦ as the money supply is increased, the interest rate will decrease, and the price of U.S. exports and U.S. imports will rise.


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Marked as best answer by cdr_15 on Apr 19, 2019

angrybirds13579

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