Multiple Choice
In the monetary small open-economy model with a flexible exchange rate, an increase in the domestic money supply increases
A) domestic output, but has no effect on the domestic price level or the nominal exchange rate.
B) the nominal exchange rate, but has no effect on domestic output or the domestic price level.
C) the domestic price level, but has no effect on domestic output or the nominal exchange rate.
D) the domestic price level and the nominal exchange rate, but has no effect on domestic output.
E) the domestic price level and domestic output, but has no effect on the nominal exchange rate.
Correct Answer:
Verified
Correct Answer:
Verified
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