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:

Orexin

A neuropeptide that regulates arousal, wakefulness, and appetite, playing a significant role in sleep-wake cycles.

Lateral Hypothalamus

An area of the brain that regulates hunger and thirst.

Ventromedial Hypothalamus

A region of the hypothalamus involved in regulating hunger and satiety signals, playing a critical role in energy homeostasis and weight regulation.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors.