As the Economy Moves Up and to the Right Along

question 4

Multiple Choice

As the economy moves up and to the right along the IS curve,which of the following will occur when exchange rates are flexible?

• A)investment spending increases
• B)consumption increases
• C)the domestic currency depreciates
• D)all of the above
• E) none of the above

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Definitions:

International Trade

The exchange of goods, services, and capital across international borders or territories.

Monetary System

The set of mechanisms and institutions that provide a country with its currency and manage its supply and value.

Trade Deficit

The economic condition that occurs when a country imports more goods and services than it exports.