Answer Happy

Question 16 (5 points) Studies show that under flexible exchange rates the foreign exchange markets themselves are an important source of shocks. The country with the smallest shocks coming from the exchange market is: Denmark The United Kingdom Sweden Canada Question 17 (5 points) Under fixed exchange rates a temporary positive demand shock (z > 0) will: create a cycle in output none of the options shown O push up output after which it will gradually return to equilibrium decrease the foreign price level Question 18 (5 points) Comparing fixed with flexible exchange rates, fiscal policy has a larger effect under fixed rates a has a smaller effect under fixed rates O has a larger effect under flexible rates has the same effect under each system