Assume That the Current Demand for Goods DOES Depend on Expectations

question 12

Multiple Choice

Assume that the current demand for goods DOES depend on expectations in the IS-LM model.A monetary expansion in the current period will cause a rightward shift in the IS curve if

• A)current and expected future real interest rates are positively related.
• B)current and expected future real interest rates are negatively related.
• C)current and expected future real interest rates are unrelated.
• D)the central bank is expected to reverse any current movements in monetary policy in the future.
• E) monetary policy cannot affect, directly or indirectly, the position of the IS curve in the current period.

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Definitions:

Repay the Loan

The act of paying back borrowed money to the lender according to the agreed terms.

Financial Managers

Professionals responsible for the financial health of an organization, overseeing investment strategies, planning, and managing financial reports.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle.

Payables Financing

A form of short-term borrowing where a company finances its accounts payables through a third party.