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

question 5

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

---

Definitions:

Hypogastric Region

The lower central part of the abdomen located below the umbilical region.

Umbilicus

Also known as the navel or belly button, it is the scar on the abdomen that marks the former attachment point of the umbilical cord.

Lumbar Region

The lower part of the spine, consisting of five vertebrae, which plays a key role in supporting the upper body and allowing movement.

Blood Glucose

The sugar that is transported through the bloodstream to supply energy to cells.