With Flexible Exchange Rates,perfect Asset Substitutability,and Perfect Capital Mobility,expansionary Monetary

question 9

Multiple Choice

With flexible exchange rates,perfect asset substitutability,and perfect capital mobility,expansionary monetary policy will cause

• A)income to rise, interest rates to fall, and the domestic currency to depreciate.
• B)income to fall, interest rates to rise, and the domestic currency to appreciate.
• C)income to rise, interest rates to remain unchanged, and the domestic currency to appreciate.
• D)income to rise, interest rates to remain unchanged, and the domestic currency to depreciate.

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