q1

Question 7 Consider the IS curve for the open economy. An increase in the world real interest rate causes because : (a) the IS curve to shift to the right; it leads to a depreciation of the domestic real exchange rate (b) a rightward movement along the IS curve; it leads to a depreciation of the domestic real exchange rate (c) the IS curve shifts to the left; it leads to a depreciation of the domestic real exchange rate (d) the IS curve shifts to the right; it leads to an appreciation of the domestic real exchange rate (e) a leftward movement along the IS curve; the change in investment and net exports offset each other