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

question 29

Multiple Choice

In the monetary small open-economy model with a flexible exchange rate, an increase in the domestic money supply increases

• A)domestic output, but has no effect on the domestic price level or the nominal exchange rate.
• B)the nominal exchange rate, but has no effect on domestic output or the domestic price level.
• C)the domestic price level, but has no effect on domestic output or the nominal exchange rate.
• D)the domestic price level and the nominal exchange rate, but has no effect on domestic output.
• E)the domestic price level and domestic output, but has no effect on the nominal exchange rate.

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