Use the Following to Answer Questions :
Exhibit: IS*-LM $I S _ { 1 } ^ { * }$

question 105

Multiple Choice

Use the following to answer questions :
Exhibit: IS*-LM*
-(Exhibit: IS*-LM*) A small open economy with a fixed exchange rate e₂ is initially at equilibrium A with $I S _ { 1 } ^ { * }$ $L M _ { 1 } ^ { * }$ and equilibrium output Y₁. If there is an increase in government spending to $I S _ { 2 } ^ { * }$ the new equilibrium will be at ____, holding everything else constant.

• A) A
• B) B
• C) C
• D) D

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Definitions:

Functional Play

A type of play involving repetitive actions that develop physical control and coordinate motor skills in children.

Onlooker Play

A type of play where a child watches other children play but does not join in, often seen during early childhood development.

Regression

A defense mechanism in psychology where an individual's behavior reverts to an earlier stage of development, often in response to stressful situations.

Habituation

The diminishing of a physiological or emotional response to a frequently repeated stimulus.