In an IS-LM Model, a Decrease in Autonomous Saving Will

question 30

Multiple Choice

In an IS-LM model, a decrease in autonomous saving will

• A)decrease income but increase the interest rate
• B)shift the LM-curve to the left
• C)shift the IS-curve to the left
• D)increase both income and the interest rate
• E)decrease both income and the interest rate

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Definitions:

Automatic Stabilizers

Economic policies and programs, like unemployment benefits, that automatically adjust to stabilize an economy during fluctuations.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, usually visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Automatic Stabilizers

Economic mechanisms, such as progressive taxation and welfare, that automatically adjust to counteract economic fluctuations without the need for explicit government intervention.

Unemployment Compensation

A government program that provides financial assistance to individuals who have lost their jobs through no fault of their own.