Policymakers Are Contemplating Undertaking Either an Increase in Government Spending

question 95

Essay

Policymakers are contemplating undertaking either an increase in government spending or an increase in the money supply. Either policy is forecast to have the same impact on income in the short run. Use the IS-LM model to compare the impact on consumption and investment of the two policy alternatives.

---

Definitions:

Michael Reaction

A conjugate 1,4-addition reaction of a carbon nucleophile to an α,β-unsaturated carbonyl compound.

α,β-unsaturated Carbonyl

An organic compound with a double bond between the alpha and beta carbon atoms adjacent to a carbonyl group, participating in various chemical reactions.

PhCOCH

A general formula shorthand for compounds where a benzene ring (indicated by Ph, standing for phenyl) is attached to a carbonyl group (CO) and an additional unspecified group (CH), leading to a variety of possible chemical structures.

Cyclopentanecarboxylic Acid

A cycloalkane derived carboxylic acid, with the carboxyl group attached to a five-membered ring.