Under a Flexible-Price Monetary Approach to the Exchange Rate

question 51

Multiple Choice

Under a flexible-price monetary approach to the exchange rate

• A) when the domestic money supply falls, the price level would eventually fall, increasing the interest rate.
• B) when the domestic money supply falls, the price level would fall right away, causing a reduction in the interest rate.
• C) when the domestic money supply falls, the price level would fall right away, causing an increase in the interest rate.
• D) when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant.
• E) when the domestic money supply falls, the price level would fall right away, keeping the interest rate constant.

---

Definitions:

Extension

A movement that increases the angle between two body parts, such as straightening a flexed knee.

Flexion

A movement decreasing the angle between two body parts, such as bending the arm at the elbow or the knee.

Extensor Carpi Ulnaris

A muscle located in the forearm that extends and adducts the wrist, playing a significant role in the movement of the hand and wrist.

Adduct

To move a limb or other body part toward the midline of the body.