Exhibit: Shifting IS* and LM* a Small Open Economy

question 51

Multiple Choice

Exhibit: Shifting IS* and LM* A small open economy with a floating exchange rate is initially in equilibrium at A with Holding all else constant, if the government imposes a tariff on imports in order to protect domestic jobs, then the _____ curve will shift to _____.

• A)LM₁*; LM₂*
• B)LM₁*; LM₃*
• C)IS₁*; IS₂*
• D)IS₁*; IS₃*

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Definitions:

Negative Effects

Unfavorable or harmful outcomes resulting from an event, action, or condition, impacting individuals or wider communities.

Social Psychological

Pertaining to how individual thoughts, feelings, and behaviors are influenced by the social environment and presence of others.

Cognitive Association

The mental linking or relating of ideas, concepts, or stimuli, which plays a role in how thoughts and memories are organized.

Economic Deprivation

A state of lacking economic resources and essentials, leading to poor living conditions and limited access to goods and services.