Based on Our Understanding of the IS- LM Model That

question 22

Multiple Choice

Based on our understanding of the IS- LM model that takes into account dynamics, we know that a decrease in the money supply will cause:

• A) a gradual increase in Y and a gradual decrease in i.
• B) an immediate decrease in i and an immediate increase in Y.
• C) a gradual increase in i and a gradual decrease in Y.
• D) an immediate increase in i and no initial change in Y.
• E) an immediate decrease in Y and an immediate increase in i.

---

Definitions:

Linear Correlation

A correlation that is best expressed visually as a straight line.

Direct Correlation

A relationship where an increase in one variable is associated with an increase in another, indicating a positive linear relationship.

Scatterplot

A graphical representation using dots to show the relationship between two quantitative variables.

Variables

Elements or characteristics within a study or research that can change and potentially impact the study's results.