Given IS and LM Curves of the Usual Slope, an Upward

question 12

Multiple Choice

Given IS and LM curves of the usual slope, an upward price shock from abroad can be expected to cause

• A) nominal interest rates to rise and real interest rates to fall.
• B) both nominal and real interest rates to fall.
• C) nominal interest rates to fall and real interest rates to rise.
• D) both nominal and real interest rates to climb.
• E) an unknown affect, because we cannot tell from the information given.

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