Suppose individuals expect that interest rates will decrease in the future.Also assume that the Fed wants to prevent any change in current output.Given this goal of the Fed,the Fed should implement a policy in the current period that
A)shifts the IS curve rightward.
B)shifts the IS curve leftward.
C)shifts the IS curve leftward and the LM curve upward.
D)shifts the LM curve upward.
E) shifts the LM curve downward.

Question

Quizplus · Accepted Answer

The Fed should shift the LM curve upward to prevent any change in current output when individuals expect that interest rates will decrease in the future.

Suppose Individuals Expect That Interest Rates Will Decrease in the Future.Also