Exhibit: Policy Interaction Based on the graph, starting from equilibrium at interest rate r₃, income Y₂, IS₁, and LM₁, if there is an increase in government spending that shifts the IS curve to IS₂ and the Bank of Canada does not change the money supply, the new equilibrium combination of interest and income will be _____. A)r₁, Y₂ B)r₂, Y₃ C)r₃, Y₃ D)r₃, Y₄

Question

Quizplus · Accepted Answer

The Answer of Exhibit: Policy Interaction Based on the graph, starting from equilibrium at interest rate r₃, income Y₂, IS₁, and LM₁, if there is an increase in government spending that shifts the IS curve to IS₂ and the Bank of Canada does not change the money supply, the new equilibrium combination of interest and income will be _____. A)r₁, Y₂ B)r₂, Y₃ C)r₃, Y₃ D)r₃, Y₄

Exhibit: Policy Interaction Based on the Graph, Starting from Equilibrium