The Increase in Income in Response to a Fiscal Expansion

question 122

Multiple Choice

The increase in income in response to a fiscal expansion in the IS-LM is:

• A) always less than in the Keynesian-cross model.
• B) less than in the Keynesian-cross model unless the LM curve is vertical.
• C) less than in the Keynesian-cross model unless the LM curve is horizontal.
• D) less than in the Keynesian-cross model unless the IS curve is vertical.

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Definitions:

Activation Energy

The minimum amount of energy that must be provided to compounds to result in a chemical reaction.

Gaseous Products

The substances formed as a result of a chemical reaction that exist in the gas state at room temperature.

Thermal Energy

the internal energy present in a system due to its temperature.

Kinetic Energy

The energy possessed by an object due to its motion, proportional to its mass and the square of its velocity.