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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.
√(24²+285-8²-172) = ?²
289 + 896 + 144 – 25% of 1100 =?
60 = (? x 10 + 250)/5
Find the value of ‘y’ if (2/7) × y = 0.79 – 1.77 ÷ 3.
24% of 15% of 500 + 122 = ?2 – (232 ÷ 2)
`sqrt(5476)` + 40% of 1640 = ?`xx` 4 - 2020
Determine the value (6.375)2 - (3.125)2
The value of 97 × 103 is _________.
24% of 400 × 16% of ? = 384
Find the value of 'p' in the given expression: 15 of 6 ÷ p x 4 = 30.