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

question 22

Multiple Choice

In the monetary small open-economy model with a fixed exchange rate, an increase in the world real interest rate

• A) increases domestic output and has no effect on the domestic price level.
• B) decreases domestic output and has no effect on the domestic price level.
• C) increases the domestic price level and has no effect on domestic output.
• D) decreases the domestic price level and has no effect on domestic output.
• E) decreases the money supply and has no effect on domestic output.

---

Definitions:

Retrieval Failure

The inability to recall information that is stored in long-term memory, often due to interference or lack of cues.

Embarrassed

A feeling of self-consciousness, shame, or awkwardness.

Remember

The cognitive process of recalling information or experiences that were previously encoded and stored in the brain.

Address

The specific location or digital identification where someone lives or an organization is situated, or a means to direct a message or communication.