The Increase in Income in Response to a Fiscal Expansion

question 28

Multiple Choice

The increase in income in response to a fiscal expansion in the IS-LM model is:

• A)always less than in the Keynesian-cross model.
• B)less than in the Keynesian-cross model unless the LM curve is vertical.
• C)less than in the Keynesian-cross model unless the LM curve is horizontal.
• D)less than in the Keynesian-cross model unless the IS curve is vertical.

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Definitions:

Stimulants

A class of drugs that increase brain activity, leading to increased alertness, attention, and energy.

Dopamine

A neurotransmitter involved in many functions, including mood regulation, motivation, and reward.

Gastric Acid

A digestive fluid formed in the stomach, consisting mainly of hydrochloric acid and enzymes that break down food particles.

Neurotransmitter

Chemical messengers released from neurons to transmit signals across synapses to other neurons or cells.