Consider the determination of real exchange rates in a large open economy with a flexible exchange rate regime. If today’s technology increase, e* will Blank 1 . If tomorrow’s technology is expected to improve, e* will Blank 2 . If M decreases, e* will Blank 3 . If the government decreases G1 while keeps G2 unchanged, e* will Blank 4 . Note: For each of the above blanks, fill in one of the following three choices: A. increase; B. decrease; C. stay; D. none of A, B, and C.

Consider the determination of real exchange rates in a large open economy with a flexible exchange rate regime. If today’s technology increase, e* will
Blank 1
. If tomorrow’s technology is expected to improve, e* will
Blank 2
. If M decreases, e* will
Blank 3
. If the government decreases G1 while keeps G2 unchanged, e* will
Blank 4
.

Note: For each of the above blanks, fill in one of the following three choices: A. increase; B. decrease; C. stay; D. none of A, B, and C.

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