From an Initial IS-LM Equilibrium with Normally-Sloped IS and LM

question 139

Multiple Choice

From an initial IS-LM equilibrium with normally-sloped IS and LM curves,the money supply falls.At the new IS-LM equilibrium we have some combination of a ________ income and a ________ interest rate.

• A)higher,higher
• B)higher,lower
• C)lower,higher
• D)lower,lower

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Definitions:

Monopolistic Competitor

A firm operating in a market with many competitors but differentiating its product or services from others, thus having some degree of market power.

Price Discrimination

A strategy where a company sells the same product at different prices to different customers, not based on costs but typically on willingness or ability to pay.

Monopolistically Competitive Industry

An industry characterized by many firms offering products that are similar but not perfect substitutes, leading to competitive markets where companies compete on product differentiation, prices, and marketing.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good demanded by consumers.