In the Monetary Small Open-Economy Model with a Fixed Exchange

question 31

Multiple Choice

In the monetary small open-economy model with a fixed exchange rate, a temporary decrease in domestic total factor productivity in the absence of any other shocks

• A) increases the current account surplus and increases the domestic money supply.
• B) increases the current account surplus and decreases the domestic money supply.
• C) increases the domestic money supply and decreases the current account surplus.
• D) decreases the domestic money supply and decreases the current account surplus.
• E) decreases the current account surplus and increases the price level.