Suppose a small open economy has a floating exchange rate and the government reduces spending. What will happen to real income in the short run?

Less government spending will make the currency value of the small country to fall compared to other currencies, because less government spending means less printing of money, and a slower growth of the money means less inflation, and a cheaper currency.

This will make the exports of the small open economy attractive, leading to an increase in this component of aggregate demand. Such scenario will result in a rise of real income in the short run.

- Have a disaster plan ready

-go to the basement

-lie in a ditch or low lying area

Explanation: i took it