Based on Our Understanding of the IS- LM Model That

question 74

Multiple Choice

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

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

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Definitions:

Reliable

Reliable refers to the consistency and dependability of a test, measurement, or source, indicating the extent to which it can be trusted to produce the same results under similar conditions.

Norms

Age-based averages.

Comparisons

Evaluations of the similarities and differences between two or more entities.

Derivatives

Financial instruments whose value is derived from the value of an underlying asset, such as stocks, bonds, commodities, or currencies.