If the Central Bank in a Foreign Country Increases Its

question 127

Multiple Choice

If the central bank in a foreign country increases its interest rate, then the IS curve of the domestic economy will:

• A) shift to the right.
• B) shift to the left.
• C) not shift at all.
• D) shift to the right because U.S. exports will decrease.

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Definitions:

General Adaptation Syndrome

A theoretical model describing the body's short-term and long-term reactions to stress, proposed by Hans Selye, comprising three stages: alarm, resistance, and exhaustion.

Hans Selye

A pioneering Hungarian-Canadian endocrinologist who is credited with founding the field of stress research, identifying the General Adaptation Syndrome.

Physical Effect

The tangible or observable impact or influence that something has on the body.

Hardy Personality

A personality trait characterized by resilience and the ability to remain calm and clear-headed under pressure or during difficult situations.