In late 2007 and early 2008, the U.S. Federal Reserve pursued expansionary monetary policy. Which of the following will occur as a result of this monetary policy action?
A) The LM curve shifts down.
B) The LM curve shifts up.
C) The IS curve shifts rightward as the interest rate falls.
D) The IS curve shifts leftward as the interest rate increases.
E) none of the above
A
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Mauritius, an island off the coast of Africa, competes with other countries producing goods with low-skilled labor. In 2006, it was reported that its "...factories have been exposed to ... competition from China, India, and other Asian mass producers." As a result, "the main export industry has seen a 30% reduction in volume..." The story describes:
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