If expectations of the firms about the future level of economic activity are volatile (they change a lot) then with exchange rates exchange rates there will be larger fluctuations in output as with such A) fixed; interest rate changes will tend to increase the fluctuations in investment. B) fixed; money supply changes reinforce the effects of changes in investment C) flexible; interest rate changes will tend to increase the fluctuations in investment. D) flexible; money supply changes reinforce the effects of changes in investment

If expectations of the firms about the future level of economic activity are volatile (they change a lot) then with exchange rates exchange rates there will be larger fluctuations in output as with such A) fixed; interest rate changes will tend to increase the fluctuations in investment. B) fixed; money supply changes reinforce the effects of changes in investment C) flexible; interest rate changes will tend to increase the fluctuations in investment. D) flexible; money supply changes reinforce the effects of changes in investment

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter14: Modern Macroeconomics And Monetary Policy

Section: Chapter Questions

Problem 11CQ

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