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.

---

Definitions:

Humanity's Danger

Refers to global risks or existential threats that have the potential to significantly harm or completely eliminate human civilization.

Anthropocentric

A viewpoint that regards humans as the central and most significant entities in the universe, often evaluating other beings in terms of their utility for humans.

Biocentric

An ethical viewpoint that emphasizes the intrinsic value of all living things, not just humans.