Assume That the FE Curve Is Flatter Than the LM

question 28

Multiple Choice

Assume that the FE curve is flatter than the LM curve. A negative external capital-flow shock shifts the FE curve left. Under zero sterilization, which one of the following will happen next?

• A)Because of the incipient balance of payments deficit, LM curve will shift leftward
• B)Because of the incipient balance of payments surplus, LM curve will shift rightward
• C)Because of the incipient balance of payments deficit, IS curve will shift rightward
• D)Because of the incipient balance of payments surplus, IS curve will shift leftward

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Definitions:

Printers

Machines or devices used to reproduce text and images from a template, playing a crucial role in mass communication and dissemination of information.

Ottoman Empire

A vast, multi-ethnic empire founded in the late 13th century by Osman I, which at its peak spanned Southeast Europe, Western Asia, and North Africa before its dissolution after World War I.

Three-Field System

An agricultural practice where farmland was divided into three sections, with different crops rotated annually to manage soil fertility.

Fertility

The natural capability to produce offspring, a significant factor in population dynamics and individual reproductive health.