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 world real interest rate

A) increases domestic output and has no effect on the domestic price level.
B) decreases domestic output and has no effect on the domestic price level.
C) increases the domestic price level and has no effect on domestic output.
D) decreases the domestic price level and has no effect on domestic output.
E) decreases the money supply and has no effect on domestic output.