The Figure Below Shows an IS-LM-FE Model for an Economy

question 57

Multiple Choice

The figure below shows an IS-LM-FE model for an economy with fixed exchange rates. Initially the economy is at point A, a triple intersection. Here, the FE curve is steeper than the LM curve. At point B, the economy is experiencing:

• A)a deficit in the overall balance of payments.
• B)a surplus in the overall balance of payments.
• C)an overall balance of payments that is in equilibrium.
• D)an expanding money supply.

---

Definitions:

Physical Assets

Tangible and material assets such as buildings, machinery, and equipment owned by a business.

International Environment

The global context within which organizations operate, including economic, social, cultural, and political factors.

Future Orientation

The degree to which individuals or organizations plan for and consider future outcomes in their decision-making processes.

National Culture

The set of norms, behaviors, beliefs, and customs that exist within the population of a sovereign nation.