Use the Following to Answer Questions :
Exhibit: Shifting IS $I S _ { 1 } ^ { * }$

Multiple Choice

Use the following to answer questions :
Exhibit: Shifting IS* and LM*
-(Exhibit: Shifting IS* and LM*) A small open economy with a floating exchange rate is initially in equilibrium at A with $I S _ { 1 } ^ { * }$ $L M _ { 1 } ^ { * } .$ Holding all else constant, if domestic consumers develop greater preferences for imported goods, then the _____ curve will shift to _____.

A) LM₁*; $L M _ { 2 } ^ { * }$
B) LM₁*; $L M _ { 3 } ^ { * }$
C) IS₁*; $I S _ { 2 } ^ { * }$
D) IS₁*; $I S _ { 3 } ^ { * }$