With the Foreign Interest Rate in the IS Model,an Increase

question 16

Multiple Choice

With the foreign interest rate in the IS model,an increase in the domestic interest rate causes __________ because __________.

• A)leftward movement along the IS curve;it leads to appreciation of the domestic real exchange rate and causes domestic investment to fall
• B)leftward movement along the IS curve;domestic investment falls
• C)the IS curve to shift left;it leads to appreciation of the domestic real exchange rate and causes domestic investment to fall
• D)the IS curve to shift left;it leads to depreciation in the domestic real exchange rate and causes a decline in domestic investment
• E)the IS curve to shift right;it leads to appreciation in the domestic real exchange rate

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Definitions:

Operating Activities

The day-to-day actions that are involved in running a business, typically involving production, sales, and delivery of a company's product or service.

Dividends Per Share

The amount of dividend a company pays out to each shareholder for each share they own, typically expressed on an annual basis.

P/E

Price-to-Earnings Ratio, a valuation metric comparing the current share price of a company to its per-share earnings.

Market Price

The current price at which an asset or service can be bought or sold on the open market.