If Price Expectations Are Assumed to Be Correct, Money Demand

Multiple Choice

If price expectations are assumed to be correct, money demand is proportional to income, and net capital flow is infinitely elastic, then the mother of all models in the Appendix to Chapter 14 corresponds to which of the following special cases?

A) classical closed economy
B) classical open economy
C) IS-LM model
D) Mundell-Fleming model with floating exchange rate