Due to macroeconomics interdependence between large countries, the effect of a permanent fiscal expansion by Home is as follows: Home output
A) falls, Home's currency appreciates, Foreign output rises.
B) rises, Home's currency appreciates, Foreign output rises.
C) rises, Home's currency depreciates, Foreign output rises.
D) rises, Home's currency appreciates, Foreign output decreases.
E) falls, Homes currency depreciates, Foreign output rises.
Question 2
The efficiency
A) gain from a fixed exchange rate with the euro is smaller when trade between say, Norway and the euro zone, is extensive than when it is small.
B) gain from a fixed exchange rate with euro is greater when trade between say, Norway and the euro zone, is extensive than when it is small.
C) loss from a fixed exchange rate with the euro is smaller when trade between say, Norway and the euro zone, is extensive than when it is small.
D) gain from a fixed exchange rate with euro is the same as when trade between say, Norway and the euro zone, is extensive than when it is small.
E) gain from a fixed exchange rate with euro is the same as when trade between say, Norway and the euro zone, is small than when it is small.
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