In a simplified banking system with a 20 percent required reserve ratio, a $1,000 open-market sale by the Fed would cause the money supply to:

A decrease in the cost of production will shift the supply curve down and to the right

Indicate whether the statement is true or false

What happens in the short run in the Keynesian model to the exchange rate and net exports in each of the following cases?

(a) The foreign real interest rate falls. (b) Foreign output rises. (c) Foreign demand for domestic goods rises. (d) Domestic output rises. (e) The domestic real interest rate falls.