In the IS-MP analysis in the Fed model, an increase in net exports will shift the:
A)MP curve up.
B)MP curve down.
C)IS curve to the left.
D)IS curve to the right.

Question

Quizplus · Accepted Answer

An increase in net exports (exports-imports) means that there is an increase in the demand for the country's goods and services from abroad. This will increase the output and income, leading to a rightward shift of the IS curve. Therefore, the correct answer is D, the IS curve shifts to the right.

In the IS-MP Analysis in the Fed Model, an Increase