Ask Question
3 May, 01:29

In a small open economy with a floating exchange rate, if the government increases the money supply, then in the new short-run equilibrium the:

+1
Answers (1)
  1. 3 May, 02:56
    0
    Answer: The correct answer is : the exchange rate will increase, but the income will remain unchanged.

    Explanation: Under a floating system, the exchange rate fluctuates in response to changing economic conditions. Under these same conditions but if the government decreases the money supply, in the new short-term equilibrium income falls and the exchange rate increases.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “In a small open economy with a floating exchange rate, if the government increases the money supply, then in the new short-run equilibrium ...” in 📙 Social Studies if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers