Suppose We Have an Initial IS-LM Equilibrium at a Certain

question 140

Multiple Choice

Suppose we have an initial IS-LM equilibrium at a certain price level.A rise in the price level puts ________ pressure on the interest rate as the money market re-equilibrates,which in turn causes commodity market equilibrium to occur at an output level ________ the initial one.

• A)upward,above
• B)upward,below
• C)downward,above
• D)downward,below

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Definitions:

Flow of Finance

Refers to the movement of money among various participants in an economy including institutions, markets, individuals, and governments.

Learning by Doing

A theory that suggests proficiency and efficiency improve over time through practice and hands-on experience.

Regional Level

Refers to the geographical tier that encompasses localities within a larger national or international context, focusing on specific area-based initiatives or characteristics.

Smaller Firms

Refers to businesses that are relatively small in size, often characterized by fewer employees, lower annual revenues, and limited market share compared to larger corporations.