Use the Following to Answer Questions :
Exhibit: IS*-LM* and AD

question 116

Multiple Choice

Use the following to answer questions :
Exhibit: IS*-LM* and AD
-(Exhibit: IS*-LM* and AD) A small open economy with a floating exchange rate is initially in equilibrium at A with $I S _ { 1 } ^ { * }$ $L M _ { 1 } ^ { * } .$ Holding all else constant, if the domestic price level increases, then the _____ curve will shift to _____.

• A) LM₁*; \(L M _ { 2 } ^ { * }\)
• B) LM₁*; \(L M _ { 3 } ^ { * }\)
• C) IS₁*; \(I S _ { 2 } ^ { * * }\)
• D) IS₁*; \(I S _ { 3 } ^ { * }\)

---

Definitions:

Direct Format

A communication method where information is presented clearly and straightforwardly without digression.

Sincere Apology

A genuine expression of remorse and regret towards someone for an error or mistake made, often aimed at mending a relationship.

Indirect Approach

A communication strategy where the main point or request is presented after providing background information or rationale.

Disappointed Audience

A group of people who feel let down or dissatisfied with a performance, presentation, or outcome.