Question
A fall in consumer confidence about the future, which induces consumers to spend less and save more, will, according to the large open economy with
A fall in consumer confidence about the future, which induces consumers to spend less and save more, will, according to the large open economy with floating exchange rates, lead to:
A) no change in consumption or income
B) no change in income or net exports
C) decrease in interest rates, decrease in output, depreciation of the exchange rate, and increase in net exports
D) decrease in interest rates, decrease in output, appreciation of the exchange rate, and decrease in net exports
In a short-run model of a large open economy with a floating exchange rate, a monetary expansion causes a decrease in the interest rate and:
A) net exports and net capital outflow but increases in investment and income
B) the exchange rate but has no effect on income
C) the exchange rate and increases in income, net capital outflow, and net exports
D) the exchange rate and net capital outflow and increases in income and net exports
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