Based on our understanding of the IS-LM model that takes into account dynamics, we know that an increase in government spending will cause
A) a gradual increase in i and gradual increase in Y.
B) an immediate increase in Y and immediate drop in i.
C) an immediate increase in i and no initial change in Y.
D) a gradual increase in i and an immediate increase in Y.
A
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All inferior goods have upward-sloping demand curves.
Answer the following statement true (T) or false (F)
What is the difference between inflation and deflation?
A) Inflation is a sustained decrease in the price level whereas deflation is a sustained increase in the price level. B) Inflation is a sustained increase in the price level whereas deflation is a sustained decrease in the price level. C) Inflation is a measure of relative prices whereas deflation is a sustained increase in the price level. D) None of the above.
When interest rates rise in the United States (with the price level fixed), the value of the dollar ________, domestic goods become ________ expensive, and net exports ________
A) falls; less; fall B) falls; more; rise C) rises; more; fall D) rises; less; fall
When relatively few workers have high ability,
A) they will settle for the average wage. B) they will want to signal their ability. C) the premium for high ability is less than when most workers have high ability. D) they do not need to signal their ability.