Based on Our Understanding of the IS- LM Model That

Multiple Choice

Based on our understanding of the IS- LM model that takes into account dynamics, we know that a decrease in the money supply will cause:

A) a gradual increase in Y and a gradual decrease in i.
B) an immediate decrease in i and an immediate increase in Y.
C) a gradual increase in i and a gradual decrease in Y.
D) an immediate increase in i and no initial change in Y.
E) an immediate decrease in Y and an immediate increase in i.