In the Monetary Small Open-Economy Model with a Fixed Exchange

Multiple Choice

In the monetary small open-economy model with a fixed exchange rate, an increase in the foreign price level

A) increases the domestic money supply and increases the domestic price level.
B) increases the domestic money supply and decreases the domestic price level.
C) decreases the domestic money supply and increases the domestic price level.
D) decreases the domestic money supply and decreases the domestic price level.
E) the domestic price level decreases in proportion to the increase in the foreign price level.