In the Situation Pictured in Question #13 Above, During the Automatic

question 3

Multiple Choice

In the situation pictured in Question #13 above, during the automatic adjustment process to the disequilibrium in the balance of payments,

• A) the BP curve will shift to the left (or vertically upward).
• B) the IS curve will shift to the left (or vertically downward).
• C) the LM curve will shift to the right (or vertically downward).
• D) the IS curve will shift to the right (or vertically upward).

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Definitions:

Market Price

The going rate at which a product or service is available for buying or selling in a particular market.

Pure Competition

A market structure characterized by an extremely high level of competition, where no single buyer or seller has the power to influence prices or market conditions.

Agriculture

The practice of cultivating the land and raising livestock for food, fiber, and other products.

Economic Profits

The earning surplus after all forms of expenses, direct and indirect, are deducted from total earnings.