In a Flexible Exchange Rate Regime,a Reduction in the Foreign

question 16

Multiple Choice

In a flexible exchange rate regime,a reduction in the foreign interest rate (i*) will cause

• A)the IP curve to shift to the left / up.
• B)the IP curve to shift to the right / down.
• C)a movement along the IP curve.
• D)neither a shift nor movement along the IP curve.

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