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Darina [25.2K]
3 years ago
11

Monetary policy has a​ ________ effect on aggregate demand in​ a(n) ________​ economy, and fiscal policy has a​ ________ effect

on aggregate demand in​ a(n) ________ economy.A. weaker; open;​ weaker; open
B. weaker; closed;​ stronger; closed
C. stronger; closed;​ weaker; open
D. ​stronger; open;​ weaker; closed
Business
1 answer:
PIT_PIT [208]3 years ago
5 0

Answer:

The correct answer is D

Explanation:

In the open economy, there is a regime of flexible exchange which means that the monetary policy will be more effective than the fiscal policy as the aggregate demand (AD) is boosted by the depreciation in the exchange rate which result in decrease in the interest rate.

So, the monetary policy has stronger effect on AD in the open economy and the fiscal policy has weaker impact on AD in closed economy.

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In this case, choosing to go to the local carnival will represent losing one hour of working as a coach assistant ($15). Besides, as there is a $9 admission fee to the carnival, you will need to spend that money. Thus, the total opportunity cost of going to the carnival instead of working is $24 (<em>$15+$9=$24</em>).

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