In a Short-Run Model of a Large Open Economy with a Floating

question 131

Multiple Choice

In a short-run model of a large open economy with a floating exchange rate, a fiscal expansion causes an increase in:

• A) the exchange rate and a fall in net exports but has no effect on income.
• B) the money supply and an increase in income but has no effect on the exchange rate.
• C) income, the interest rate, and net exports, but a decrease in investment and in the exchange rate.
• D) income, the interest rate, and the exchange rate, but a decrease in investment and net exports.

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Definitions:

Woodrow Wilson

The 28th President of the United States, serving from 1913 to 1921, known for leading the country through World War I and advocating for the League of Nations.

Trusts

Companies combined to limit competition.

Recall

A Progressive-era reform that allowed the removal of public officials by popular vote.

Historical Significance

The importance assigned to a past event, based on its impact on the present and its influence on or relevance to historical development or understanding.