The IS/LM/BP Analysis Suggests That, If the BP Curve Is

question 2

Multiple Choice

The IS/LM/BP analysis suggests that, if the BP curve is flatter than the LM curve and the exchange rate is flexible, expansionary fiscal policy will lead to __________ of the Country's currency, which will make the fiscal policy __________ effective in influencing National income than if the country had a fixed exchange rate.

• A) a depreciation; more
• B) a depreciation; less
• C) an appreciation
• D) an appreciation; less

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Definitions:

Generalizability

The extent to which findings from a study can be applied to broader populations, settings, and times.

Construct Validity

The degree to which a test or instrument measures the theoretical construct it is intended to measure.

Face Validity

The extent to which a test or instrument appears to measure what it is supposed to measure, based on a superficial assessment.

Third-variable Problem

A confounding issue in research that occurs when a seemingly causal relationship between two variables is actually caused by an unseen, third variable.