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

question 48

Multiple Choice

In the monetary small open-economy model with a fixed exchange rate,an increase in the foreign price level

• A) increases the domestic money supply and increases the domestic price level.
• B) increases the domestic money supply and decreases the domestic price level.
• C) decreases the domestic money supply and increases the domestic price level.
• D) decreases the domestic money supply and decreases the domestic price level.

---

Definitions:

Nearest Cent

Rounding an amount to the closest cent, often used in financial transactions to ensure accuracy.

One Decimal Place

A numerical value rounded to a single digit following the decimal point.

Compound Interest

A method where interest is accrued both on the initial sum either deposited or loaned out, and also on the interest that has built up over prior periods.

Nearest Cent

Rounding an amount to the closest cent (1/100th of a currency unit) based on its decimal value.