Suppose That a Bond-Financed Deficit Shifts the IS Curve to the Right,taking

question 74

Multiple Choice

Suppose that a bond-financed deficit shifts the IS curve to the right,taking IS-LM equilibrium "northeast" from point A to point B.If government bonds are considered net wealth by the public sector,then by the portfolio theory of asset-holding there is an excess ________ money at point B because the LM curve has shifted ________ with increased wealth,and thus the fiscal policy turns out to be ________ expansionary than without the wealth effect.

• A)demand for,downward,more
• B)demand for,downward,less
• C)demand for,upward,less
• D)supply of,downward,more
• E)supply of,upward,more

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