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An increase in the Canadian money supply would cause Canadian output to ________ and the Canadian...

An increase in the Canadian money supply would cause Canadian output to ________ and the Canadian net exports to ________ in the short run using a Keynesian model. A) rise; rise B) fall; rise C) rise; fall D) fall; fall

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Answer #1

an increase in the money supply can get to result in more money available for the production of the goods in the short run with which the output increases and increase in money supply results in increase in inflation which makes the currency depreciate against foreign currency which makes the export cheaper for foreign countries and with this the demand increases and more exports will take place

Therefore (A) rise; rise is the answer to the question

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