In the IS-LM Model, the Interest Rate Serves as a Link

question 35

Multiple Choice

In the IS-LM model, the interest rate serves as a link between

• A)household saving and business investment
• B)government spending and consumer spending
• C)actions of the central bank and changes in consumer spending
• D)the goods market and the assets market
• E)domestic markets and foreign markets

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Definitions:

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Normal Balance

The side of an account (debit or credit) where increases to the account are recorded.

Financial Statement(s)

Documents that provide an overview of a company's financial condition, including income statements, balance sheets, and statements of cash flows.

Permanent/Temporary

Categories of accounts in accounting; permanent accounts are balance sheet accounts that carry their balances throughout multiple accounting periods, while temporary accounts are income statement accounts that are cleared to zero at the end of each accounting period.