In an IS-LM Model with Flexible Exchange Rates and Perfect

question 41

Multiple Choice

In an IS-LM model with flexible exchange rates and perfect capital mobility, restrictive fiscal policy will

• A)cause an appreciation of the domestic currency
• B)shift first the LM-curve and then the IS-curve to the left
• C)not change the overall level of output, but will change its composition
• D)cause a decrease in net exports
• E)lower the level of output but leave the interest rate unchanged

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Definitions:

British-American Conflict

generally refers to the series of disputes and battles between the British Empire and its American colonies, culminating in the American Revolution of 1775-1783.

Second Continental Congress

A convention of delegates from the Thirteen Colonies that managed the colonial war effort during the American Revolution and adopted the Declaration of Independence.

Declaration Of Independence

A document adopted on July 4, 1776, by the Second Continental Congress, declaring the thirteen American colonies independent from British rule.