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

question 43

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) decreases output and the current account surplus.
• B) increases output and the current account surplus.
• C) increases output and decreases the current account surplus.
• D) decreases output and increases the current account surplus.
• E) leaves output unchanged and decreases the current account surplus.

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Definitions:

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