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-Refer to Figure 13

Question 17

Multiple Choice

-Refer to Figure 13.2. If an increase in exports shifted the AD curve from AD<sub>0</sub> to AD<sub>2</sub> the equilibrium inflation rate would increase: A) regardless of the reaction of the central bank. B) only if government expenditure increased as much as exports. C) only if the central bank raised its inflation target and adjusted monetary policy. D) regardless of the fiscal policy implemented by government.
-Refer to Figure 13.2. If an increase in exports shifted the AD curve from AD0 to AD2 the equilibrium inflation rate would increase:


A) regardless of the reaction of the central bank.
B) only if government expenditure increased as much as exports.
C) only if the central bank raised its inflation target and adjusted monetary policy.
D) regardless of the fiscal policy implemented by government.

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