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19 July, 04:25

Which of the following would cause the exchange rate to appreciate in a small open economy with floating exchange rate? The money supply is decreased. Government spending is decreased. Taxes are increased. The money supply is increased.

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  1. 19 July, 05:36
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    The money supply is decreased.

    Explanation:

    If the money supply is decreased, it will cause the exchange rate to appreciate in a small open economy with floating exchange rate and in the new short-run equilibrium income falls.
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