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    Macroeconomics Study Set 39
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    Exam 13: The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime
  5. Question
    In a Small Open Economy with a Floating Exchange Rate
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In a Small Open Economy with a Floating Exchange Rate

Question 6

Question 6

Multiple Choice

In a small open economy with a floating exchange rate, an effective policy to decrease equilibrium output is to:


A) decrease government spending.
B) decrease taxes.
C) increase the money supply.
D) decrease the money supply.

Correct Answer:

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