An Increase in Financial Frictions Causes the IS Curve to Shift

question 4

Multiple Choice

An increase in financial frictions causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

• A) left; left
• B) left; right
• C) right; left
• D) right; right

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Definitions:

Simple Random Samples

A subset of individuals chosen from a larger set, where each individual has an equal chance of being selected.

Selection Bias

A type of bias caused by selecting non-random data for statistical analysis, which can affect the validity of conclusions.

Systematic Tendency

A consistent, directional bias or movement in a series of data or measurements, often due to a specific cause.

Individuals

Single entities or members of a population being studied or considered in a statistical or observational analysis.