Assume the Output Market Adjusts More Rapidly Than the Asset

question 112

Multiple Choice

Assume the output market adjusts more rapidly than the asset market. A point of disequilibrium that is below both AA and DD will therefore initially result in

• A) an increase in output.
• B) a decrease in output.
• C) a contraction of the money supply.
• D) a depreciation of the home currency.
• E) an appreciation of the home currency.