Suppose the population were convinced that all current adjustments in income were temporary. In the short run then,
A) the IS curve would be steeper than usual, the government spending multiplier would be larger, and monetary policy would be weaker.
B) the IS curve would be steeper than usual, the gove rnment spending mu l t i- plier would be smaller, and monetary policy would be less effe c t ive.
C) the IS curve would be flatter than usual, the government spending multi- plier would be smaller, and monetary policy would be more effective.
D) the IS curve would be flatter than usual, the government spending multi- plier would be unaffected, but monetary policy would be less effective.
E) none of the above.

Question

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The Answer of Suppose the population were convinced that all current adjustments in income were temporary. In the short run then,
A) the IS curve would be steeper than usual, the government spending multiplier would be larger, and monetary policy would be weaker.
B) the IS curve would be steeper than usual, the gove rnment spending mu l t i- plier would be smaller, and monetary policy would be less effe c t ive.
C) the IS curve would be flatter than usual, the government spending multi- plier would be smaller, and monetary policy would be more effective.
D) the IS curve would be flatter than usual, the government spending multi- plier would be unaffected, but monetary policy would be less effective.
E) none of the above.

Suppose the Population Were Convinced That All Current Adjustments in Income