In an Open Economy,an Increase in Foreign Output Would Cause

question 101

Multiple Choice

In an open economy,an increase in foreign output would cause the IS curve to shift ________ and a decrease in the foreign real interest rate would cause the IS curve to shift ________.

• A)down; down
• B)down; up
• C)up; down
• D)up; up

---

Definitions:

Net Advantage

The total benefits received minus the costs incurred from an investment or business decision.

Resale Value

The estimated market value of an asset at the future date when it is likely to be sold, often used in reference to vehicles and property.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Tax Shields

The reduction in income taxes that results from taking allowable deductions such as depreciation, mortgage interest, and other allowances.