In a short-run model of a large open economy with a floating exchange rate, if business expectations become pessimistic, this leads to a fall in:   A) the exchange rate and a fall in net exports but has no effect of 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 an increase in net exports

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Q: Explain why in case of a fixed exchange rate regime temporary and permanent fiscal policy changes do…

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Q: The rate at which one currency can be exchanged for another is the exchange rate.   B) Exchage rates…

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Q: small open economy.

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Q: Contrast the effects of having a fixed versus a floating exchange rate for a country’s economy

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Q: Explain the impact of no restriction on foreign goods on the real exchange rate.

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Q: Which of the following affects the demand for U.S. dollars in the foreign exchange market?

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