Question

Under a flexible-price monetary approach to the exchange rate Group of answer choices when the domestic money supply falls, the price level would fall right away, causing an increase in the interest rate. when the domestic money supply falls, the price level would fall right away, causing a reduction in the interest rate. when the domestic money supply falls, the price level would fall right away, keeping the interest rate constant when the domestic money supply falls, the price level would eventually fall, increasing the interest rate. when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant.

Answer 1

when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant.

Step-by-step explanation:

Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.

In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.

The flexible-price monetary model was developed by Frenkel and Mussa in 1976 and it states that the prices of goods are flexible while the purchasing power parity (PPP) is always constant.

Under a flexible-price monetary approach to the exchange rate when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant.