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galben [10]
3 years ago
6

A small open economy with a floating exchange rate is initially in equilibrium at A with IS*1, LM*1. Holding all else constant,

if domestic consumers develop greater preferences for imported goods, then the _____ curve will shift to _____.A. LM; LM*2B. LM; LM*3C. IS; IS*2D. IS; IS*3
Business
1 answer:
irga5000 [103]3 years ago
3 0

Answer:

Option D is correct

Explanation:

The curve would shift to the left because there Is an increase in import product that is the I + G + X curve would fall as the S + T +IM curve rises due to increase in IM(import product) causing the income fall.

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