(Solved): Why is expansionary fiscal policy less effective in an open economy than in a closed economy? Multi ...

Why is expansionary fiscal policy less effective in an open economy than in a closed economy? Multiple Choice Because it increases the interest rate and increoses the exchange rate. Becnuse it increases the interest rate and reduces the exchange rate Because it decreases the interest rote and reduces the exchonge rate. Becouse it increases the interest rate and incioases the exchange rate. All of the following, except one, are advantages of a fixed exchange rate. Which is the exception? Multiple Choice It would make fiscal policy far more powerful. It would keep the prices of products constant between nations. It would increase certainty and thus boost trade between the nations. It would lead to macroeconomic stablity and encourage investment. Why is expansionary fiscal policy more effective if it is used in tandem with expansionary monetary policy? Multiple Choice All of these above are true. Because it does not cause a reduction in investment spending or exports Because the interest rate remains constant Because there is no crowing-out effect: Multiple Cholce it is easier to control inflation and thus keep interest retes low. It ensures that prices are the same for all countries in the currency region It allows for qreater specialization in banking that better fits the varied needs of business It removes the uncertainty of doing business within the whole community and this lowers the lransections costs. All of the following, except one, are advantages of a common currency. Which is the exception? Muliple Choice It is easier to control inflation and thus keep interest rates low. It ensures that prices are the same for all countries in the currency region It allows for greoter specializotion in bonkeng that better fits the varied needs of business It removes the uncertainty of doing business within the whole community and thus lowors the transactions costs