Answer Happy

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The following diagram indicates the end result of an expansionary fiscal policy in the IS-LM model. LM Y, Y, Y 9. The increase in the level of output is the result of an increase in the money supply that decreases the interest rate and increase consumer spending. b) an increase in government spending which increases the demand for goods. c) an increase in taxation which decreases the demand for goods. The increase in the interest rate is the result of a) A decrease in the money supply. b) An increase in the level of output which increases the demand for money. A decrease in investment spending. c) d) An increase in taxation which decreases the demand for money. 11. If the rightward shift of the IS curve is the result an increase in government spending the increase in the level of output from YO to Y2... a) is equal to the increase in government spending. b) is greater than the increase in government spending c) is smaller than the increase in government spending. 12. At point E2 compared to point E consumption spending by households... a) is higher. b) is lower. c)is the same. d) is indeterminate. 13. At point E2 compared to point E investment spending by firms is ... a) higher. b) lower. c)the same. d) indeterminate. 14. At point E2 compared to point E the money supply is... a) higher. b) lower. c) the same. d) indeterminate 10.
Interest rate (%) LM 500 Output (Y)(5 billion) 4. Refer to the figure above. An expansionary fiscal policy shifts the curve to the A) IS; left B) LM; right C) IS, right D) LM; left. 5. Refer to the figure above. A contractionary monetary policy shifts the curve to the A) LM; right B) IS; right C) IS, left D) LMf; left. 6. Refer to the figure above. As a result of and the equilibrium output level increases. the equilibrium interest rate increases a) an expansionary monetary policy. b) a contractionary monetary policy. c) an expansionary fiscal policy. d) a contractionary fiscal policy. 7. Refer to the figure above. As a result of the equilibrium interest rate increases and the equilibrium output level decreases. a) an expansionary monetary policy. b) a contractionary monetary policy. c) an expansionary fiscal policy. d) a contractionary fiscal policy. 8. Refer to the figure above. Which policy mix would definitely increase the equilibrium interest rate? a) An expansionary monetary policy and an expansionary fiscal policy. b) A contractionary monetary policy and a contractionary fiscal policy. c) An expansionary fiscal policy and a contractionary monetary policy. d) An expansionary monetary policy and a contractionary fiscal policy.