In the context of the IS-LM model, choose the correct option.O If foreign income falls, then the IS curve shifts to the left, leading to less output and a lower interest rate.O If foreign income falls, then the IS curve shifts to the right, leading to higher output and a higher interest rate.O If foreign income falls, then the LM curve shifts to the left, leading to less output and a higher interest rate.O If foreign income falls, then the LM curve shifts to the right, leading to more output and a lower interest rate.

In the context of IS LM the behaviour can be explained as follows:

come falls, then the IS curve shifts to the left, leading to less output and a lower come falls, then the IS curve shifts to the right, leading to higher output and a hi come falls, then the LM curve shifts to the left, leading to less output and a high

come falls, then the IS curve shifts to the left, leading to less output and a lower come falls, then the IS curve shifts to the right, leading to higher output and a hi come falls, then the LM curve shifts to the left, leading to less output and a high

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In the context of the IS-LM model, choose the correct option.
O If foreign income falls, then the IS curve shifts to the left, leading to less output and a lower interest rate.
O If foreign income falls, then the IS curve shifts to the right, leading to higher output and a higher interest rate.
O If foreign income falls, then the LM curve shifts to the left, leading to less output and a higher interest rate.
O If foreign income falls, then the LM curve shifts to the right, leading to more output and a lower interest rate.

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