If the LM Curve Is Vertical and Government Spending Rises

question 17

Multiple Choice

If the LM curve is vertical and government spending rises by G, in the IS-LM analysis, then equilibrium income rises by:

• A) G/(1 - MPC).
• B) more than zero but less than G/(1 - MPC).
• C) G.
• D) zero.

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Definitions:

External Forces

Outside influences for change.

Competitors' Actions

involves analyzing and responding to the strategies, movements, and decisions made by rival businesses in the marketplace.

Customers' Preferences

The tastes, likes, or desires of consumers that influence their purchasing decisions.

External Force

Factors or influences originating outside an organization that necessitate change or adaptation by the organization.