Use the following to answer questions :
Exhibit: Risk Premium $Use the following to answer questions : Exhibit: Risk Premium -(Exhibit: Risk Premium) A small open economy with a floating exchange rate is initially in equilibrium at A with I S _ { 1 } ^ { * } L M _ { 1 } ^ { * } . If there is an increase in the risk premium, then L M _ { 1 } ^ { * } <sub> </sub>will shift to _____ and I S _ { 1 } ^ { * } will shift to _____. A) L M _ { 2 } ^ { * } , I S _ { 2 } ^ { * } B) L M _ { 2 } ^ { * } , I S _ { 3 } ^ { * } C) L M _ { 3 } ^ { * } , I S _ { 2 } ^ { * } D) L M _ { 3 } ^ { * } , I S _ { 3 } ^ { * }$
-(Exhibit: Risk Premium) A small open economy with a floating exchange rate is initially in equilibrium at A with

I S _ { 1 } ^ { * }

L M _ { 1 } ^ { * } .

If there is an increase in the risk premium, then

L M _ { 1 } ^ { * }

will shift to _____ and

I S _ { 1 } ^ { * }

will shift to _____.
A)

L M _ { 2 } ^ { * } , I S _ { 2 } ^ { * }

L M _ { 2 } ^ { * } , I S _ { 3 } ^ { * }

L M _ { 3 } ^ { * } , I S _ { 2 } ^ { * }

L M _ { 3 } ^ { * } , I S _ { 3 } ^ { * }

The Intersection of the IS* and LM* Curves Shows the ______

Multiple Choice

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The Intersection of the IS^* and LM^* Curves Shows the ______

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