An IS Curve Shows Combinations Of

question 92

Multiple Choice

An IS curve shows combinations of:

• A) taxes and government spending.
• B) nominal money balances and price levels.
• C) interest rates and income that bring equilibrium in the market for real balances.
• D) interest rates and income that bring equilibrium in the market for goods and services.

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Definitions:

Marginal Propensity

The proportion of an additional unit of income that is spent on consumption; a key concept in Keynesian economics related to how income changes affect spending.

Simple Multiplier

The Simple Multiplier is an economic concept that quantifies the impact of a change in investment, government spending, or other economic activity on total output or income.

Aggregate Expenditure

Aggregate expenditure is the total amount of spending in an economy, including consumer spending, investment, government spending, and net exports.

Equilibrium Real GDP

The level of gross domestic product where aggregate supply equals aggregate demand at current prices, adjusted for inflation.