Suppose, in the Basic Mundell-Fleming Diagram That Plots the Internal

question 12

Multiple Choice

Suppose, in the basic Mundell-Fleming diagram that plots the internal balance (IB) and external balance (EB) schedules against the interest rate (i) and government spending minus taxes (G - T) , that the economy is located at a point that is above (or to the left) of the IB schedule and also above (or to the left) of the EB schedule. In this situation the economy is experiencing

• A) unacceptably high unemployment and a balance-of-payments deficit.
• B) unacceptably high unemployment and a balance-of-payments surplus.
• C) unacceptably rapid inflation and a balance-of-payments deficit.
• D) unacceptably rapid inflation and a balance-of-payments surplus.

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The ability to assess and initiate things independently, often leading to action or the undertaking of new projects.

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