In the Monetary Small Open-Economy Model,a Flexible Exchange Rate Insulates

question 60

Multiple Choice

In the monetary small open-economy model,a flexible exchange rate insulates the domestic price level from

• A) both real and nominal shocks from abroad.
• B) real shocks from abroad, but not from nominal shocks from abroad.
• C) nominal shocks from abroad, but not from real shocks from abroad.
• D) neither real nor nominal shocks from abroad.
• E) increases in foreign interest rates, but not from increases in foreign price levels.

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