Using the IS Curve $\tilde { Y } _ { t } = \bar { a } - \bar { b } \left( R _ { t } - \bar { r } \right)$

question 24

Multiple Choice

Using the IS curve $\tilde { Y } _ { t } = \bar { a } - \bar { b } \left( R _ { t } - \bar { r } \right)$ , in the long run, $\bar { a }$
________ and ________, so that ________.

• A) equals one; \(R _ { t } = \bar { r }\) ; the economy is in recession
• B) is greater than one; \(R _ { t } > \bar { r }\) ; the economy is at its long-run equilibrium
• C) equals zero; \(R _ { t } = \bar { r }\) ; the economy is at its long-run equilibrium
• D) equals one; \(\bar { b } = \bar { a }\) ; the economy is expanding
• E) equals one; \(R _ { t } = 1\) ; the economy is in recession

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