« previous next »

Author Question: A change in which of the following causes a shift in the IS curve? A) autonomous investment B) ... (Read 189 times)

serike

  • Hero Member
  • *****
  • Posts: 542
on: Jun 30, 2018
A change in which of the following causes a shift in the IS curve?
 
  A) autonomous investment
  B) autonomous net exports
  C) taxes
  D) all of the above
  E) none of the above

Question 2

How does the open-economy IS-MP model incorporate net exports with a floating exchange rate system?
 
  What will be an ideal response?


janeli1

  • Sr. Member
  • ****
  • Posts: 330
Reply #1 on: Jun 30, 2018
Answer to Question 1

D

Answer to Question 2

The impact of the real interest rate on the floating exchange-rate system makes total expenditures more responsive to changes in the real interest rate, causing the IS curve to be more elastic (flatter). For example, an increase in the real interest rate increases the exchange rate, decreasing net exports. So, the higher real interest rate decreases not only investment and consumption expenditures, but also net exports.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Women are 50% to 75% more likely than men to experience an adverse drug reaction.

Did you know?

Medications that are definitely not safe to take when breastfeeding include radioactive drugs, antimetabolites, some cancer (chemotherapy) agents, bromocriptine, ergotamine, methotrexate, and cyclosporine.

Did you know?

About 100 new prescription or over-the-counter drugs come into the U.S. market every year.

Did you know?

There are over 65,000 known species of protozoa. About 10,000 species are parasitic.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Zonal wind speeds on Uranus. Shaded areas show the southern collar and its future northern counterpa Zonal wind speeds on Uranus. Shaded areas show the southern collar and its future northern counterpa
Chloride shift reaction Chloride shift reaction
An Inverted U Curve An Inverted U Curve
Oxygen dissociation curve Oxygen dissociation curve
Defining Climate Change Defining Climate Change
Saturation curve for hemoglobin of humans, llamas, and other mammals. Saturation curve for hemoglobin of humans, llamas, and other mammals.
Video: Metabolic Rate, Heat and Thermoregulation - response to heat and cold stresses

For a complete list of videos, visit our video library