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

question 19

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 domestic consumers develop greater preferences for imported goods, then the _____ curve will shift to _____.

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

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Cross-Cultural Research

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