Consider the IS Curve

question 18

Multiple Choice

Consider the IS curve
If there is no demand shock and
And
,a 1 percent increase in the real interest rate causes shortrun output to:

• A)fall by 2 percent.
• B)rise by 4 percent.
• C)fall by 4 percent.
• D)fall by 0.5 percent.
• E)Not enough information is given.

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