Assume the output market adjusts more rapidly than the asset ...

[a0266361136]

Assume the output market adjusts more rapidly than the asset market. A point of disequilibrium that is below both AA and DD will therefore initially result in
 
  A) an increase in output.
  B) a decrease in output.
  C) a contraction of the money supply.
  D) a depreciation of the home currency.
  E) an appreciation of the home currency.

Question 2

What do you expect would be the effects of 9/11 on the size of the Eurocurrency markets?
 
  What will be an ideal response?

[Yixagurpuldink]

Answer to Question 1

B

Answer to Question 2

Will increase due to fear that foreign deposits in the U.S. will be frozen unless coordinated efforts by all countries.