Figure 13-2

-In Figure 13-2 above,suppose that the Fed maintains a constant interest rate,commodity prices are fixed,and that commodity demand is unstable ranging from IS₀ to IS₁.Equilibrium real output would then range from

Question

Figure 13-2
 
-In Figure 13-2 above,suppose that the Fed maintains a constant interest rate,commodity prices are fixed,and that commodity demand is unstable ranging from IS₀ to IS₁.Equilibrium real output would then range from

Quizplus · Accepted Answer

In the given scenario, the only variable that changes is the commodity demand, which shifts the IS curve. Since the interest rate is constant and commodity prices are fixed, the intersection of the IS curve with the AD curve determines the equilibrium level of real output. As the IS curve shifts from IS₀ to IS₁, the equilibrium level of output would change from B₀ to B₁, representing the range of possible outcomes. Therefore, the correct choice is B) B₀ to B₁.

Figure 13-2 -In Figure 13-2 Above,suppose That the Fed Maintains a Constant