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msouthern msouthern
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4 years ago
Assume that there is a balance of payments deficit caused by a high rate of domestic inflation. (Choose correct answer in each case.)
a) What effect will a deflationary monetary policy (a reduction in money supply) have on interest rates?
Raise/Lower them.
b) What effect will this have on the financial account?
Cause an inflow/outflow of finance
c) What effect will this have on the money supply?
Increase it/Reduce it
d) What effect will this have on inflation?
Help to reduce it/increase it
e) What effect will a deflationary fiscal policy have on interest rates?
Raise/Lower them
f) What effect will this have on the capital account?
Cause an inflow/outflow of capital
g) What effect will this have on the money supply?
Increase/Reduce it
h) What effect will this have on inflation?
Help to reduce it/increase it
i) Which will be more effective under fixed exchange rates: fiscal or monetary policy?
Fiscal/Monetary
Textbook 
Essential Economics for Business

Essential Economics for Business


Edition: 5th
Authors:
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RNIPPRNIPP
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4 years ago
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msouthern Author
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4 years ago
Brilliant ツ
fxinternational
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Yesterday
Thanks
jmelchor77
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2 hours ago
Smart ... Thanks!
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