Suppose That Net Exports Were to Become More Sensitive to Changes

question 22

Multiple Choice

Suppose that net exports were to become more sensitive to changes in the interest rate. You would reflect this change by drawing

• A) steeper LM curves.
• B) flatter LM curves.
• C) steeper IS curves.
• D) flatter IS curves.
• E) IS and LM curves exactly as before.

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Definitions:

Adjusting Entry

An accounting entry made into a journal at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Property Tax

A tax assessed on real estate by the local government and based on the property's value.

Adjusting Journal Entry

A journal record used to adjust the balances in various ledger accounts to more accurately reflect income and expenses for the period.

Supplies Account

An account that tracks the cost of supplies not yet used by a business.