In the New Keynesian Open Economy Model with a Flexible

question 15

Multiple Choice

In the New Keynesian open economy model with a flexible exchange rate, suppose there is an increase in money demand. Which of the following happens?

• A) nothing
• B) the exchange rate depreciates
• C) output increases
• D) the exchange rate appreciates
• E) investment goes up

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Definitions:

Health Department

A part of the government concerned with the health of the population, responsible for public health policies, research, and disease control measures.

Population

The whole number of people or inhabitants in a country or region, or a specific group of individuals being studied.

Reinforcement

A concept in psychology and behavior analysis where a certain behavior is encouraged or discouraged through rewards or punishments.

Unconditioned Stimulus

In classical conditioning, it is a stimulus that unconditionally, naturally, and automatically triggers a response without prior learning.