Under a fixed exchange rate system with perfect capital mobility, the effect of an internal shock from a change in autonomous consumption: a. Has no effect on domestic AD because tax rates move in an offsetting way b. Is moderated by a change in the exchange rate С. Changes domestic interest rates O d. Causes a change in the domestic inflation rate and the real exchange rate

Under a fixed exchange rate system with perfect capital mobility, the effect of an internal shock from a change in autonomous consumption: a. Has no effect on domestic AD because tax rates move in an offsetting way b. Is moderated by a change in the exchange rate С. Changes domestic interest rates O d. Causes a change in the domestic inflation rate and the real exchange rate

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 46P: Imagine that the economy of Germany finds itself in the following situation: the government budget...

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