When other countries let their exchange rates float and maintain
their money supplies constant, the short-run response of a big
country's output to positive domestic policy shocks is
1. bigger in the case of monetary policy than it would be if
other countries keep their exchange rates constant.
2. smaller in the case of monetary policy than it would be if
other countries keep their exchange rates constant.
3. the same in the case of fiscal policy as it would be if
other countries keep their exchange rates constant.
4. bigger in the case of fiscal policy than it would be if
other countries keep their exchange rates constant.
Choose the correct option