The central bank of a small open economy with perfect capital mobility and a fixed exchange rate can increase equilibrium income by:devaluing the currency.shifting the LM* curve to the left.allowing the currency to float while retaining a fixed exchange rate.revaluing of the currency.

Suppose that in a small open economy with perfect capital mobility and a fixed exchange rate, the domestic currency is valued higher than the official exchange rate. As the economy adjusts to achieve equilibrium, the LM* curve will shift rightward and:increase the equilibrium income.decrease the equilibrium income.leave the equilibrium income unaffected.destabilize the equilibrium income but make it fluctuate in unpredictable ways.

In a small open economy with a fixed exchange rate, if the central bank decreases the money supply, then in the new short-run equilibrium：A.The exchange rate risesB.income risesC.income fallsD.income remain constant

Consider a small open economy that is operating under a floating-exchange-rate regime with perfect capital mobility. In this economy, an increase in government spending would cause the equilibrium income to:decrease and the exchange rate to increase.increase and the exchange rate to decrease.increase and the exchange rate to remain unchanged.remain unchanged and the exchange rate to increase.

Suppose that in a small open economy with perfect capital mobility and a floating exchange rate, the central bank increases the money supply because the economy is in a recession. This will cause the equilibrium income to _____ and the equilibrium exchange rate to _____.decrease; risedecrease; fallincrease; fallincrease; rise

Some economists suggest that one benefit of adopting a fixed-exchange-rate regime is that it forces the central bank to:prevent excessive increases in the money supply.use money supply changes as the main policy tool to keep the economy at full employment.keep inflation rates to zero percent.allow the money supply to grow unchecked.