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    Macroeconomics Study Set 9
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    Exam 11: The Is-Mp Model: Adding Inflation and the Open Economy
  5. Question
    Under a Fixed Exchange Rate System,at Low Domestic Real Interest
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Under a Fixed Exchange Rate System,at Low Domestic Real Interest

Question 1

Question 1

Multiple Choice

Under a fixed exchange rate system,at low domestic real interest rates net capital outflows are ________,so the central bank ________ foreign-exchange reserves.


A) positive; acquires
B) positive; loses
C) negative; acquires
D) negative; loses

Correct Answer:

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