Multiple Choice
In response to a temporary change in total factor productivity, the adoption of capital controls under a flexible exchange rate
A) amplifies the effect of this disturbance on both domestic output and the nominal exchange rate.
B) amplifies the effect of this disturbance on domestic output and dampens the effect on the nominal exchange rate.
C) dampens the effect of this disturbance on domestic output and amplifies the effect on the nominal exchange rate.
D) dampens the effect of this disturbance on both domestic output and the nominal exchange rate.
E) dampens the effect of this disturbance on both domestic output and the real exchange rate.
Correct Answer:
Verified
Correct Answer:
Verified
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