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

question 59

Multiple Choice

In the monetary small open-economy model with a fixed exchange rate, a devaluation of the domestic currency in the absence of any other shocks

• A)increases the domestic money supply and has no effect on the current account surplus.
• B)decreases the current account surplus and has no effect on the domestic money supply.
• C)decreases the domestic money supply and has no effect on the current account surplus.
• D)increases the current account surplus and has no effect on the domestic money supply.
• E)decreases the current account surplus and increases the price level.

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Definitions:

Internal Controls

Mechanisms, policies, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Safeguarding Assets

Refers to the actions and policies put in place by an organization to protect its assets from theft, damage, or misuse.

Voucher System

A method of accounting in which documents are used to authorize and record transactions.

Cash Receipts

Money received by a business from its operations, including cash sales and collections on credit accounts.