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

question 40

Multiple Choice

In the monetary small open-economy model with a fixed exchange rate,an increase in the world real interest rate

• A) increases domestic output and has no effect on the domestic price level.
• B) decreases domestic output and has no effect on the domestic price level.
• C) increases the domestic price level and has no effect on domestic output.
• D) decreases the domestic price level and has no effect on domestic output.

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