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Exhibit: IS*-LM* and AD ​ a Small Open Economy

question 96

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Exhibit: IS*-LM* and AD Exhibit: IS*-LM* and AD   ​ A small open economy with a floating exchange rate is initially in equilibrium at A with IS<sub>1</sub>*; LM<sub>1</sub>*. Holding all else constant, if the domestic price level increases, then the _____ curve will shift to _____. A) LM<sub>1</sub>*; LM<sub>2</sub>* B) LM<sub>1</sub>*; LM<sub>3</sub>* C) IS<sub>1</sub>*; IS<sub>2</sub>* D) IS<sub>1</sub>*; IS<sub>3</sub>* ​ A small open economy with a floating exchange rate is initially in equilibrium at A with IS1*; LM1*. Holding all else constant, if the domestic price level increases, then the _____ curve will shift to _____.

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