18.In an open economy under flexible exchange rates, and represented by the IS-LM-IP model, a tax increase will cause a reduction in which of the following in the short run? A) the exchange rate, E B) exports C) net exports D) all of the above E) none of the above
19.A common argument for fixed exchange rates is that they:
20.Assume that firms experience an increase in sales. We would expect that this increase in sales will cause:
21.Suppose policy makers want to reduce net exports and keep the level of output constant. Which of the following policies would most likely achieve this?
22.Suppose a country is pursuing a fixed exchange rate regime with imperfect capital mobility. The ability of that country to move its domestic interest rate while maintaining its exchange rate will depend on: A) the degree of development of its financial markets. B) the amount of foreign exchange it holds. C) the degree of capital controls. D) all of the above E) both A and B