A Steep IS Curve Implies That

question 89

Multiple Choice

A steep IS curve implies that

• A)an increase in money supply will change output by a relatively small amount.
• B)a decrease in taxes will change output by a relatively small amount.
• C)changes in money supply will have large multiplier effects on output.
• D)A and B.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at those prices.

Price Makers

Entities that have the ability to control the prices of the products or services they offer, due to lack of significant competition.

Downward-Sloping Demand

Describes the general tendency for the demand for a good or service to decrease as its price increases.

Monopolistic Competitors

Firms in a market structure where many companies sell products or services that are similar but not identical, allowing for competition based on quality, price, and branding.