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Exhibit: Policy Interaction Based on the Graph, Starting from Equilibrium

question 36

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Exhibit: Policy Interaction Exhibit: Policy Interaction   Based on the graph, starting from equilibrium at interest rate r<sub>3</sub>, income Y<sub>2</sub>, IS<sub>1</sub>, and LM<sub>1</sub>, if there is an increase in government spending that shifts the IS curve to IS<sub>2</sub>, then in order to keep the interest rate constant, the Bank of Canada should _____ the money supply, shifting to _____. A) increase; LM<sub>2</sub> B) decrease; LM<sub>2</sub> C) increase; LM<sub>3</sub> D) decrease; LM<sub>3</sub> Based on the graph, starting from equilibrium at interest rate r3, income Y2, IS1, and LM1, if there is an increase in government spending that shifts the IS curve to IS2, then in order to keep the interest rate constant, the Bank of Canada should _____ the money supply, shifting to _____.

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Definitions:

Discrete Product-Producing Process

A manufacturing or production process that outputs distinct, separate goods, often in a batch or serialized manner.

Human-Machine Interface

The user interface in industrial control systems that allows humans to interact, monitor, and communicate with machinery and processes.

Actuators

Devices that convert electrical signals into physical movement or action, often used in industrial machinery to move or control mechanisms.

Sensors

Devices that detect and respond to some type of input from the physical environment, such as temperature, light, pressure, etc.

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