In the Long-Run ISLM Model and with Everything Else Held

question 80

Multiple Choice

In the long-run ISLM model and with everything else held constant,the long-run effect of an expansionary fiscal policy is to ________ real output and ________ the interest rate.

• A)increase;increase
• B)not change;not change
• C)increase;not change
• D)not change;increase

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Definitions:

Malkiel's Study

An academic research work that analyzes market trends, investor behavior, and the efficiency of financial markets, particularly known for supporting the random walk hypothesis.

Subsequent-year Period

A timeframe that follows the current year, used in forecasting and planning for future financial or operational activity.

Investment Company Assets

Assets held by a company that pools together money from many investors to purchase securities such as stocks, bonds, and other financial assets.

Mutual Funds

Investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.