Consider the IS-LM Curves for an Economy with Flexible Exchange

question 135

Multiple Choice

Consider the IS-LM curves for an economy with flexible exchange rates. An increase in the foreign income will result in the:

• A) LM curve shifting to the right.
• B) IS curve shifting to the right.
• C) LM curve shifting to the left.
• D) IS curve shifting to the left.

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Definitions:

Consol

A type of perpetuity.

Future Values

The value of an asset or amount of money at a specified date in the future that is equivalent in value to a specified sum today.

Present Values

The process of determining the present worth of an amount or series of cash flows that will be received or paid in the future, using a specific discount rate.

Annuity Payment

A fixed sum of money paid to someone each period, typically for the rest of their life or for a fixed number of years.