In the New Keynesian Open Economy Model with a Fixed

question 66

Multiple Choice

In the New Keynesian open economy model with a fixed exchange rate, suppose there is an increase in money demand. Which of the following happens?

• A)output increases
• B)output decreases
• C)nothing
• D)the exchange rate appreciates
• E)the money supply increases

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Definitions:

Sedatives

Drugs that have a calming effect, reduce nervousness, and help induce sleep by depressing the central nervous system.

Central Nervous System Stimulant

A class of drugs that increase brain activity, leading to increased alertness, attention, and energy.

Delta-Wave

A type of high amplitude brain wave that is associated with deep sleep and is found in the human EEG (electroencephalogram).

Snoring

The sound produced by vibrations of the soft tissues in the throat and airway during sleep.