Exam 17: Macroeconomic Policy and Floating Exchange Rates

A contractionary fiscal policy generally results in a capital inflow and a current account deficit.

A contractionary fiscal policy usually causes an appreciation of the country's currency.

An expansionary monetary policy can lead to lower interest rates, a depreciating currency, and a current account deficit.

The levels of inflation and unemployment that fit the preferences of a country's citizens is known as:

With flexible exchange rates, monetary policy is not very effective in changing exchange rates and interest rates.

As a government adopts an expansionary fiscal policy:

11 Expansionary fiscal policy usually involves some combination of ____ taxes and/or _____ government spending on goods and services.

Monetary and fiscal policy are usually focused on internal balance because inflation and unemployment are less important than the current account balance.

In a closed economy, expansionary fiscal policy causes:

Which of the following statements is true?

With flexible exchange rates, an expansionary fiscal policy will increase output and income.

A larger government budget deficit leads to higher interest rates and an inflow of capital.

In a closed economy, an expansionary fiscal policy:

Changes in a country's money supply and interest rates are called:

A contractionary monetary policy generally results in a capital inflow and a current account deficit.

In the short run, the supply of loanable funds is determined by the amount of money the public wishes to save.

A contractionary monetary policy:

Fiscal policy refers to government changing:

Show how a larger government budget deficit tends to lead to an appreciation of the currency.

In a closed economy, an expansionary monetary policy causes: