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Yes, via the MDP interface:
Mini DisplayPort (MDP) / Thunderbolt
Mini DisplayPort is the current digital standard on all current Macs to transfer video to an external display or TV. It has been introduced in 10/2008 with the release of the Unibody MacBook and MacBook Pros and has gradually been adopted on all other Macs.
MDP is capable of transmitting video, and since 2010, audio too. MDP is a miniaturised version of DisplayPort. It is also license free and can support resolutions of up to 2560 x 1600, which Mini DVI and Micro DVI are not able to do.
Since 2011, all Macs come with a Thunderbolt port, which is meant for fast data transfer and also as means to connect to an external display device to mirror or extend the Mac's screen.
To learn more about Thunderbolt (TB) and its compatibility with Mini DisplayPort (MDP): Introducing Thunderbolt
MR_video_out_Mac_Mini_DP.png
MDP adapters can be bought online from:
MDP to VGA adapter from Apple
MDP to DVI adapter from Apple
MDP to Dual-Link-DVI adapter from Apple

Moshi Mini DP to HDMI Adapter with Audio Support adapter from the Apple Online Store

Mini DisplayPort + USB to Dual-Link DVI adapter from Monoprice
Mini DisplayPort to DVI adapter from Monoprice
Mini DisplayPort to VGA adapter from Monoprice
Mini DisplayPort to HDMI adapter from Monoprice - *NOTE* This product does NOT support audio for Macs that outputs audio through the Mini DisplayPort.
Mini Displayport Male and USB Male/Toslink Audio to HDMI Female Converting adapter from Monoprice
Mini Displayport Male and USB Male Audio to HDMI Female Converting adapter from Monoprice - *NOTE* Will only support 2 channel stereo. Will not support 5.1 Dolby Surround like the above adapter.

Mini DisplayPort to Mini DisplayPort Cables from Monoprice
Mini DisplayPort to VGA Cables from Monoprice
Mini DisplayPort to DVI Cables from Monoprice
Mini DisplayPort to HDMI Cables from Monoprice

Also of interest: "What is "Mini DisplayPort"? Is it an industry-standard? How is it different from or better than Mini-DVI and Micro-DVI?"

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I specifically bought the 21.5" because I wanted a dual monitor setup and I already had a 22" HP monitor which works well with my iMac.

I have the MDP to DVI connector and it works quite well. The only problem is when coming out of sleep it takes a bit longer than I would like for the HP monitor to come back on and sometimes whatever windows were open on it get bumped back to the iMac screen. Just means I have to drag the window back over which is not too much of a drag... (Pun intended).

Here is what my setup looks like...
Imac_01.jpg
 
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