Suppose There Is a Simultaneous Reduction in the Expected Future

question 16

Multiple Choice

Suppose there is a simultaneous reduction in the expected future interest rate and increase in future expected output.This will cause which of the following to occur?

• A)the IS curve to shift left in the current period
• B)the IS curve to shift right in the current period
• C)the LM curve to shift up in the current period
• D)the LM curve to shift down in the current period
• E) an ambiguous effect on the position of the IS curve in the current period

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Definitions:

Consumer Surplus

The disparity between the total cost consumers are inclined and able to bear for a good or service and the total cost they actually bear.

Consumer Surplus

The economic benefit consumers receive when they pay a price below what they were willing to pay, reflecting consumer satisfaction in economic transactions.

Consumer Surplus

The disparity between the ideal payment consumers are ready to make for a good or service and the real amount paid.

Total Expenditure

The overall amount of money spent by individuals, households, or an economy on goods and services over a specific period of time.