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As G increases, IS 1 shifts to IS 2 . At new equilibrium e', interest rate also increase and i > i*. Here,2 things are happening: a) there will now be capital inflow as a result capital A/c surplus b) Since, AD and Y increased, import demand will increase which will lead to current A/c deficit. Since, the magnitude of Capital A/c surplus will be much higher than the magnitude of current A/c deficit; there is BOP surplus. As a result domestic currency appreciates; dd for rupee has increased. As a result Exports decrease and Imports increase (imports have become cheaper) [Net exports falls] IS shifts back to initial level and equilibrium in the goods market is restored. In a small open economy with a floating exchange rate, the supply of real money balances is fixed and a rise in government spending raises the interest rate, so that income must rise to maintain equilibrium in the money market.
Identify the segment in the sentence, which contains the grammatical error.
The files you were look for are placed on the table.
Despite incessant rains, she is the only one who plan to attend the meeting at the ministry.
The decision to cut the prices were taken after a fortnightly review meeting of the oil companies.
Identify the segment in the sentence, which contains the grammatical error.
Each student will have to carry his own lunch on the picnic.
With the intervening period having provided a wealth of data points and policy developments, including the momentous roll-out of the Goods and Servic...
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It is not difficult to sense country’s displeasure, even granting its rough diplomat disposition.
Owing to the disturbing noise,( A)/ the speaker was forced (B)/ to adjourn the meetings.(C)/ No error (D)
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2. Marine phytoplankton also fixes about half the carbon diox...