Multiple Choice
In the New Keynesian open economy model, if the exchange rate is fixed
A) fiscal policy and monetary policy are powerless.
B) fiscal policy is an effective stabilization tool.
C) a change in current total factor productivity increases output.
D) monetary policy is an effective stabilization tool.
E) the real interest rate is an effective tool that can be changed by the central bank.
Correct Answer:
Verified
Correct Answer:
Verified
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