If income falls without any change in interest rates,then according to the IS-LM model it may be true that:
A)money demand fell and government spending declined.
B)the money supply increased and taxes declined.
C)tight monetary policy and easy fiscal policy.
D)easy monetary policy and easy fiscal policy.

Question

Quizplus · Accepted Answer

Easy monetary policy and easy fiscal policy would both lead to an increase in aggregate demand, which would offset the decrease in income caused by the fall in interest rates.

If Income Falls Without Any Change in Interest Rates,then According