Consider an initial IS-LM equilibrium with normally-sloped curves. An increase in government spending shifts the ________ by a horizontal distance equal to the change in government spending ________
A) IS curve to the right, divided by the Chapter 3 multiplier
B) IS curve to the right, times the Chapter 3 multiplier
C) IS curve to the left, times the interest rate at the initial equilibrium
D) LM curve to the right, divided by the Chapter 3 multiplier
E) LM curve to the right, divided by the interest rate at the initial equilibrium
B
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a. True b. False Indicate whether the statement is true or false