In addition to consumption being a function of income,suppose that it is also a function of interest rates.Now,lower interest rates make borrowing to consume easier,encouraging overall consumption.
A) How would such a change impact the shape of the IS and LM curves? AD curve?
B) How would such a change impact the effectiveness of monetary and fiscal policy? Multiple-Choice Questions:
Correct Answer:
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Q4: Assuming that as a result of observed
Q5: In the IS-LM model,the implicit assumption made
Q6: Why is the IS-LM model a model
Q7: Do workers and firms care more about
Q8: If interest rates,prices,and output are all rising,then
Q10: In the Keynesian model with both a
Q11: In the Keynesian model with a fixed
Q12: If inflation and unemployment is rising at
Q13: What happened to the price level,money wages,real
Q14: Suppose the government want to increase aggregate
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