In a Short-Run Model of a Large Open Economy with a Floating

Multiple Choice

In a short-run model of a large open economy with a floating exchange rate, a monetary expansion causes a decrease in the interest rate and:

A) the exchange rate but has no effect on income.
B) the exchange rate, and increases in income, net capital outflow, and net exports.
C) the exchange rate and net capital outflow, and increases in income and net exports.
D) net exports and net capital outflow, but increases in investment and income.