Two Interpretations of the IS-LM Model Are That the Model

question 114

Multiple Choice

Two interpretations of the IS-LM model are that the model explains:

• A) the determination of income in the short run when prices are fixed, or what shifts the aggregate demand curve.
• B) the short-run quantity theory of income, or the short-run Fisher effect.
• C) the determination of investment and saving, or what shifts the liquidity preference schedule.
• D) changes in government spending and taxes, or the determination of the supply of real money balances.

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Definitions:

Issuing Entity

The company or governmental entity that offers securities for sale to investors.

Historical Average

A statistical measure that represents the average outcome of a set of data over a previous period.

Rate of Return

The increase or decrease in the value of an investment during a specific timeframe, represented as a proportion of the investment's initial outlay.

Commodity

A basic good used in commerce that is interchangeable with other commodities of the same type; common examples include grains, gold, beef, oil, and natural gas.