Author Question: In the monetary small open-economy model with a fixed exchange rate, a temporary decrease in ... (Read 53 times)

HCHenry · **on:** Jun 30, 2018

In the monetary small open-economy model with a fixed exchange rate, a temporary decrease in domestic total factor productivity in the absence of any other shocks

A) increases the current account surplus and increases the domestic money supply.
B) increases the current account surplus and decreases the domestic money supply.
C) increases the domestic money supply and decreases the current account surplus.
D) decreases the domestic money supply and decreases the current account surplus.

Question 2

Increased liquidity in the banking system occurs when ________.

A) people buy more bonds
B) the demand for real money balances declines
C) banks buy more bonds from the central bank
D) all of the above
E) none of the above