Multiple Choice
Refer to figure 5 below. In figure 5, national income has fallen from its full employment level YF to a lower level, YU, at which there is unemployment. This may have been due to a decline in exports that has shifted the IS curve to the left. What might cause the LM curve to automatically move to the right and so move the economy back towards YF? Figure 5
A) A rise in the general level of prices in the economy.
B) A fall in the general level of prices in the economy.
C) A rise in government spending.
D) A reduction in taxes.
Correct Answer:

Verified
Correct Answer:
Verified
Q39: Refer to figure 3 below. Which statement
Q40: The IS curve will be flatter the
Q42: In the Keynesian cross diagram the 45
Q43: What was John Maynard Keynes's primary message
Q45: One of the main sources of disagreement
Q46: Suppose that the government spends more on
Q47: The IS curve measures points where the
Q48: In the IS-LM model, a rise in
Q49: If the economy is suffering from demand
Q107: Suppose that there are no crowding-out effects