In an Open Economy Under Flexible Exchange Rates and Represented

question 51

Multiple Choice

In an open economy under flexible exchange rates and represented by the IS- LM- IP model, a tax increase will cause a decrease in which of the following?

• A) Exports.
• B) Net exports.
• C) The exchange rate.
• D) Both A and B.
• E) Both B and C.

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Definitions:

Veins

Blood vessels that carry blood toward the heart, differing from arteries which carry blood away from the heart.

Left Atrium

A chamber among the heart's four, responsible for accepting blood enriched with oxygen from the lungs and propelling it into the left ventricle.

Congestive Heart

A condition, often termed congestive heart failure, where the heart is unable to pump blood efficiently, leading to fluid buildup in various parts of the body.

Myocardial Infarction

A medical condition commonly known as a heart attack, caused by the interruption of blood flow to a part of the heart.