If a country\'s macroeconomic goals include monetary policy autonomy and freedom

Question

If a country's macroeconomic goals include monetary policy autonomy and freedom of financial flows, what policy must it adopt? Financial controls Exchange rate controls Fixed exchange rate Floating exchange rate QUESTION 10 If the GDP of an economy is at its potential output level, what impact will an increase in aggregate demand have? Output will increase and prices will fall. Output will decrease and prices will fall. Output will stay the same and prices will rise. Output will stay the same and prices will fall QUESTION 11 What is the direct impact of an increase in the real money supply? Interest rates fall. Interest rates rise. The home currency depreciates. Output falls

Explanation / Answer

a) "D"

Floating exchange rate will be fit for this economy. It will allow the exchage rate to fluctuate as per the need and Monetary authority will manage it freely.

b) "C"

As it has already reached the potential level the output will not increase but the price will rise.

c) An increase in the money supply will lead to a fall in the interest rate. the answer is "A".  

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.