Suppose Individuals Expect That Interest Rates Will Fall in the Future

Multiple Choice

Suppose individuals expect that interest rates will fall in the future. Also assume that the RBA wants to prevent any change in current output. Given this goal of the RBA, the RBA should implement a policy in the current period that:

A) shifts the IS curve leftward.
B) shifts the IS curve leftward and the LM curve upward.
C) shifts the LM curve downward.
D) shifts the IS curve rightward.
E) shifts the LM curve upward.