An Increase in Financial Frictions Causes the IS Curve to Shift

question 4

Multiple Choice

An increase in financial frictions causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

• A) left; left
• B) left; right
• C) right; left
• D) right; right

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Definitions:

Thoracic Aorta

The section of the aorta that runs through the thorax, supplying oxygenated blood to the chest and upper abdominal area.

Aortic Arch

The curved portion of the aorta, the major blood vessel, which emerges from the heart and arcs down to the chest and abdomen.

Posterior Tibial Artery

A major artery of the lower leg that supplies blood to the posterior compartment of the leg and the sole of the foot.

Popliteal Artery

The major artery located in the back of the knee, it supplies blood to the knee joint and muscles in the thigh and calf.