The Reason That the Income Response to a Fiscal Expansion

question 10

Multiple Choice

The reason that the income response to a fiscal expansion is generally less in the IS-LM model than it is in the Keynesian-cross model is that the Keynesian-cross model assumes that:

• A) investment is not affected by the interest rate whereas in the IS-LM model fiscal expansion raises the interest rate and crowds out investment.
• B) investment is not affected by the interest rate whereas in the IS-LM model fiscal expansion lowers the interest rate and crowds out investment.
• C) investment is autonomous whereas in the IS-LM model fiscal expansion encourages higher investment, which raises the interest rate.
• D) the price level is fixed whereas in the IS-LM model it is allowed to vary.

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Definitions:

Prostate Cancer

A form of cancer that develops in the prostate gland in men, characterized by the abnormal growth of cells which can spread to other parts of the body.

Death Rate

The ratio of deaths to the population of a particular area during a certain time period, usually expressed per 1000 individuals per year.

Incidence

The number of new cases of a disease or condition that occur within a specified population during a given time period.

Cancer Death Rates

Statistics that represent the number of deaths caused by cancer per 100,000 population in a specified time period.