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Ao9 Ao9
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8 years ago
In the monetary small open-economy model with a flexible exchange rate, an increase in the world real interest rate
A) decreases domestic output and decreases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
B) increases domestic output and increases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
C) decreases domestic output and increases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
D) increases domestic output and decreases the nominal exchange rate, as long as real money demand is much more responsive to real income than to the real interest rate.
Textbook 
Macroeconomics

Macroeconomics


Edition: 5th
Author:
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GordisGordis
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8 years ago
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Ao9 Author
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#2
8 years ago
You're sharp, thanks!
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#3
8 years ago
Glad to help...
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