Use the IS-LM model to answer this question. Suppose there is a simultaneous increase in government spending and reduction in the money supply. Explain what effect this particular policy mix will have on output and the interest rate. Based on your analysis, do we know with certainty what effect this policy mix will have on investment? Explain
What will be an ideal response?
In this case, the LM curve shifts up and the IS curve shifts to the right. The interest rate will clearly be higher. The effects on output depend on the relative magnitude of the two policies. The effects on I are also ambiguous. If output falls, I will be lower. However, it is possible that output will rise here which creates the ambiguity.
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In the above table, the unemployment rate is
A) 6 percent. B) 24 percent. C) 18 percent. D) 29 percent.
By 1900, _____ states had a state board of health
a. 17 b. 32 c. 37 d. all
A firm operating at MC = MR must be making a profit.
Answer the following statement true (T) or false (F)
Which of the following is a credit item (+) in the U.S. balance of payments?
a. U.S. companies sell merchandise abroad. b. Foreign companies sell merchandise to U.S. consumers. c. U.S. consumers send money to foreign companies. d. Immigrants to the United States send presents of money back to their families in their native countries. e. Immigrants to the United States send presents of goods back to their families in their native countries.