In the IS-LM Model, Which Two Variables Are Influenced by the Interest

question 36

Multiple Choice

In the IS-LM model, which two variables are influenced by the interest rate?

• A) supply of nominal money balances and demand for real balances
• B) demand for real money balances and government purchases
• C) supply of nominal money balances and investment spending
• D) demand for real money balances and investment spending

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Definitions:

Debits

Entries that are made on the left side of an account ledger, representing an increase in assets or decrease in liabilities and equity.

Credits

Entries made on the right side of accounts, representing a decrease in assets or an increase in liabilities and equity.

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