Due to Macroeconomics Interdependence Between Large Countries, the Effect of a Permanent

question 135

Multiple Choice

Due to macroeconomics interdependence between large countries, the effect of a permanent monetary policy expansion by Home is as follows: Home output

• A) rises, Home's currency depreciates, and Foreign output may rise or fall.
• B) falls, Home's currency depreciates, and Foreign output may rise or fall.
• C) rises, Home's currency appreciates, and Foreign output may rise or fall.
• D) rises, Home's currency depreciates, and Foreign output rises.
• E) falls, Home's currency appreciates, and Foreign output may rise or fall.

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