In the Short Run, a Permanent Increase in the Domestic

question 5

Multiple Choice

In the short run, a permanent increase in the domestic money supply

• A) has stronger effects on the exchange rate and output than an equal temporary increase.
• B) has stronger effects only on the exchange rate but not on output than an equal temporary increase.
• C) has weaker effects on the exchange rate and output than an equal temporary increase.
• D) has stronger effects on output, but lower effect on the exchange rate than an equal temporary increase.
• E) has weaker effects only on the exchange rate than an equal temporary increase.

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