Consider an Initial IS-LM Equilibrium with Normally-Sloped Curves

question 135

Multiple Choice

Consider an initial IS-LM equilibrium with normally-sloped curves.An increase in government spending shifts the ________ by a horizontal distance equal to the change in government spending ________.

• A)IS curve to the right,divided by the Chapter 3 multiplier
• B)IS curve to the right,times the Chapter 3 multiplier
• C)IS curve to the left,times the interest rate at the initial equilibrium
• D)LM curve to the right,divided by the Chapter 3 multiplier
• E)LM curve to the right,divided by the interest rate at the initial equilibrium

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Definitions:

Original Costs

The initial amount spent to acquire an asset, including purchase price and all expenses incurred to bring the asset to its intended use.

Written Agreement

A formal contract which outlines the terms and conditions between parties in written form.

Income and Losses

A financial term encompassing the total earnings (income) and deductions (losses) affecting the net profitability of a business over a specific period.

Capital Balances

The amount of money that each partner has invested in a business, which can change over time with profits and losses.