Assume that the FE curve is flatter than the LM curve. A negative internal shock shifts the IS curve leftward. Under zero sterilization, which one of the following will happen next?
A. Because of the incipient balance of payments surplus, the IS curve will shift rightward.
B. Because of the incipient balance of payments deficit, the LM curve will shift leftward.
C. Because of the incipient balance of payments deficit, the IS curve will shift leftward.
D. Because of the incipient balance of payments surplus, the LM curve will shift rightward.
Answer: B
You might also like to view...
A business firm's profitability is based in part on the
A) prices of their nonlabor inputs. B) productivity of their workers. C) wage rates they must pay their workers. D) business taxes they must pay. E) all of the above
What is the "chicken tax" and why did it come into existence?
What will be an ideal response?
A situation in which output decreases while prices increase is often referred to as:
A. stagflation. B. inflation. C. negative economic growth. D. a recession.
Pepsi One is a close substitute for Diet Coke. When Pepsi introduced Pepsi One, the price elasticity of demand for Diet Coke ________ and Coke's ability to raise revenues through price increases ________.
A. decreased; was reduced B. had no effect; was reduced C. increased; was reduced D. increased; increased