ECON 2HH3 - Practice Test for Test 2 with Answers - ECON 2HH3 Practice Test for Test 2 Answers 1 The Mundell-Fleming model assumes that a Prices are

ECON 2HH3 - Practice Test for Test 2 with Answers - ECON...

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ECON 2HH3 – Practice Test for Test 2 – Answers11.The Mundell-Fleming model assumes that:2.In the Mundell-Fleming model, the domestic interest rate is determined by the:3.In a small open economy with a floating exchange rate, the exchange rate (defined as the value of domestic currency) will depreciate if:Refer to the diagram below to answer Question 44.A small open economy with a floating exchange rate is initially in equilibrium at A with IS*1and LM*1. Holding all else constant, if the government imposes a tariff on imports in order to protect domestic jobs, then the ______ curve will shift to:See text p. 389-390 – section on Trade Policy5.In the Mundell-Fleming model with a floating exchange rate, a rise in the world interest rate will cause income:
ECON 2HH3 – Practice Test for Test 2 – Answers26.Under a system of floating exchange rates: 7.In a small open economy, the monetary transmission mechanism for monetary policyinfluences income by altering the _______ rather than the ______: 8.Suppose P= 2.5 EP= 2.0= 1000 and the natural rate of output is 2500.

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