Under a fixed exchange rate system with perfect capital mobility, the effect of an internal shock from a change in autonomous consumption: a. Has no effect on domestic AD because tax rates move in an offsetting way b. Is moderated by a change in the exchange rate С. Changes domestic interest rates O d. Causes a change in the domestic inflation rate and the real exchange rate

Under a fixed exchange rate system with perfect capital mobility, the effect of an internal shock from a change in autonomous consumption: a. Has no effect on domestic AD because tax rates move in an offsetting way b. Is moderated by a change in the exchange rate С. Changes domestic interest rates O d. Causes a change in the domestic inflation rate and the real exchange rate

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 8PA

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