Suppose There Is a Simultaneous Reduction in Expected Future Output

question 5

Multiple Choice

Suppose there is a simultaneous reduction in expected future output and reduction in the future expected interest rate.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