In an IS-LM Model, If Net Exports Is No Longer

question 6

Multiple Choice

In an IS-LM model, if net exports is no longer assumed to be exogenous (that is, NX = NX?) , but instead is assumed to decrease as the level of income increases (that is, NX = NX? - mY, with m > 0) , then

• A)the IS-curve will become steeper and shift to the left
• B)the IS-curve will become flatter and shift to the right
• C)the LM-curve will become steeper and shift to the left
• D)the LM-curve will become flatter and shift to the right
• E)the fiscal policy multiplier will become larger