If we start from long-run general equilibrium of goods, forex, and the money markets, and there is a temporary expansion of the money supply, what will be the outcome?

A) GDP rises, the interest rate falls, and the exchange rate rises (depreciation).
B) GDP rises, the interest rate rises, and the exchange rate falls (appreciation).
C) GDP falls, the interest rate falls, and the exchange rate rises (depreciation).
D) GDP falls, the interest rate rises, and the exchange rate rises (depreciation).

Ans: A) GDP rises, the interest rate falls, and the exchange rate rises (depreciation).

Economics

You might also like to view...

Appropriation

What will be an ideal response?

Economics

A monopsonist in the labor market has

A) a perfectly elastic labor supply. B) a decreasing average variable cost. C) an upward sloping labor supply curve. D) a downward sloping marginal revenue product curve.

Economics