An Increase in Government Spending Causes the Equilibrium Level of Aggregate

question 20

Multiple Choice

An increase in government spending causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________,everything else held constant.

• A)rise;LM;right
• B)rise;IS;right
• C)fall;IS;left
• D)fall;LM;left

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Definitions:

Compounded Semi-annually

An interest calculation method where interest is added to the principal balance of an investment or loan twice a year, resulting in interest on interest.

Amortization Schedule

A detailed table showing the periodic payments on a loan, with each payment allocated between interest and principal repayment.

Gross Debt Service Ratio

A financial ratio that compares an individual's total monthly debt payments to their gross monthly income.

Amortized

The process of paying off a debt with a fixed repayment schedule in regular installments over a period of time.