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:

Total Variable Costs

Total variable costs are expenses that vary directly with changes in production or sales volume, such as raw materials and labor costs tied to production levels.

Activity Level

A measure of the volume of production or services that influences costs and revenue within a specified period.

Relevant Range

The range of activity over which the assumptions about cost behavior for a company are valid.

Activity Level

A measure of the volume or intensity of operations in a business, often influencing costs and production capacity.