Suppose There Is an Increase in Expected Future Output

question 23

Multiple Choice

Suppose there is an increase in expected future output. This will cause which of the following to occur?

• A) The IS curve to shift left in the current period.
• B) The IS curve to shift right in the current period.
• C) The LM curve to shift up in the current period.
• D) The LM curve to shift down in the current period.
• E) Both the IS and LM curves to shift right in the current period.

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Definitions:

Annual Interest Rate

The percentage increase in money that occurs over a year, which includes interest on loans, deposits, or investments.

Investments

Assets or items acquired with the goal of generating income or appreciating in value over time.

Interest on Interest

The concept of earning interest on the reinvestment of previous interest payments, a compound interest phenomena.

Average Annual Interest Rate

The average amount of interest earned or paid on an investment or loan over a one-year period, expressed as a percentage.