In a small open economy with a fixed exchange rate, if the central bank tries to increase the money supply, then in the new short-run equilibrium:
A) income rises.
B) income falls.
C) the exchange rate falls.
D) income remains constant.

Question

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The Answer of In a small open economy with a fixed exchange rate, if the central bank tries to increase the money supply, then in the new short-run equilibrium:
A) income rises.
B) income falls.
C) the exchange rate falls.
D) income remains constant.

In a Small Open Economy with a Fixed Exchange Rate