Assume perfect capital mobility and floating exchange rates.If the government runs a budget deficit,the domestic currency will _______ and cause the IS curve to ________.
A) Appreciate, shift to the right
B) Appreciate, shift to the left
C) Depreciate, shift to the right
D) Depreciate, shift to the left

Question

Quizplus · Accepted Answer

The Answer of Assume perfect capital mobility and floating exchange rates.If the government runs a budget deficit,the domestic currency will _______ and cause the IS curve to ________.
A) Appreciate, shift to the right
B) Appreciate, shift to the left
C) Depreciate, shift to the right
D) Depreciate, shift to the left

Assume Perfect Capital Mobility and Floating Exchange Rates