Suppose Fiscal Policy Makers Implement a Policy to Increase the Size

question 75

Multiple Choice

Suppose fiscal policy makers implement a policy to increase the size of a budget deficit. Based on the IS- LM model, we know with certainty that the following will occur as a result of this fiscal policy action:

• A) The price level increases.
• B) Output increases.
• C) Investment spending decreases.
• D) Output decreases.
• E) Investment spending increases.

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Definitions:

Variation

The occurrence of differences among individuals, groups, or populations, often leading to evolutionary change.

Standard Deviation

A statistical measure that represents the dispersion or variance in a set of data points from its mean.

Measure of Variation

A statistical tool used to describe the distribution or spread of data points in a dataset, common measures include variance, standard deviation, and range.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of values, indicating how spread out the numbers are in a dataset.