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

question 123

Multiple Choice

In a short-run model of a large open economy with a floating exchange rate, a monetary expansion causes a decrease in the interest rate and:

• A) the exchange rate but has no effect on income.
• B) the exchange rate, and increases in income, net capital outflow, and net exports.
• C) the exchange rate and net capital outflow, and increases in income and net exports.
• D) net exports and net capital outflow, but increases in investment and income.

---

Definitions:

Trucking LLC

A legally recognized business entity that operates in the transportation industry, specifically focused on the movement of goods by truck.

Specified Payment

A payment that has been defined in terms of amount, recipient, timing, and conditions under a contract or agreement.

Breach

The violation or breaking of a law, duty, or other form of agreement.

Dairy Farm

An agricultural establishment primarily engaged in the production of milk and milk products from cows or other dairy animals.