Reference no: EM131104247
What are the endogenous variables under a fixed exchange rate regime in a small open economy
A. interest rate and income
B. exchange rate and income
C. money supply and income
D. exchange rate and money supply
If there is a fixed-exchange-rate system, then in the long run:
A. the nominal exchange rate is fixed, but the real exchange rate is free to vary.
B. the real exchange rate is fixed, but the nominal exchange rate is free to vary.
C. both the nominal and real exchange rates are fixed.
D. the nominal and real exchange rates vary by a fixed amount.
The interest rate in a small open economy IS-LM model is determined by
A. savings and investment in small open economy
B.net exports
C. world interest rate
D. investment
In a small open economy with a fixed exchange rate, an effective policy to increase equilibrium output is to:
A. increase government spending.
B. increase taxes.
C. increase the money supply.
D. decrease the money supply.
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