In the IS-MP Framework, an Expansionary Fiscal Policy Resulting from Government

question 45

Multiple Choice

In the IS-MP framework, an expansionary fiscal policy resulting from government purchases, causes aggregate output to ________ and the interest rate to ________, everything else held constant.

• A) increase; increase
• B) increase; decrease
• C) decrease; decrease
• D) decrease; increase

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Definitions:

Transfer Warranties

Guarantees made concerning the condition or legal status of goods at the time of their transfer to a new owner.

Discharged

The completion or termination of an obligation such as a debt or legal duty.

Liability

The state of being legally responsible for something, particularly in terms of debts or legal actions.

Check

A negotiable instrument, commonly used for transactions, instructing a bank to pay a specific amount from the drawer's account to the payee or bearer.