Question Details

What are the endogenous variables under a fixed exchange rateregime 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 longrun:

A.the nominal exchange rate is fixed, but the real exchange rateis free to vary.

B. the real exchange rate is fixed, but the nominal exchangerate is free to vary.

C. both the nominal and real exchange rates are fixed.

D. the nominal and real exchange rates vary by a fixedamount.

The interest rate in a small open economy IS-LM model isdetermined 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 effectivepolicy to increase equilibrium output is to:

A.increase government spending.

B. increase taxes.

C. increase the money supply.

D. decrease the money supply.