10. In a small open economy with a floating exchange rate, if the government increases the money supply, then in the new short-run equilibrium the: A) B) C) D) exchange rate falls but net exports do not increase. interest rate falls but the level of investment does not rise. interest rate falls and the level of investment rises. exchange rate falls and net exports increase.

10. In a small open economy with a floating exchange rate, if the government increases the money supply, then in the new short-run equilibrium the: A) B) C) D) exchange rate falls but net exports do not increase. interest rate falls but the level of investment does not rise. interest rate falls and the level of investment rises. exchange rate falls and net exports increase.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 2PA

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