In the IS–LM model, the impact of an increase in government purchases in the goods market has ramifications in the money market, because the increase in income causes a(n) in money             .

Related MCQs

• In the IS–LM model under the usual conditions in a closed economy, an increase in government spending increases the interest rate and crowds out:
• If the short-run IS–LM equilibrium occurs at a level of income below the natural level of output, then in the long run the price level will , shifting the curve to the right and returning output to the natural level.
• An example of a government expenditure is
• The short-run Aggregate Supply curve is upward sloping only because we assume that resource costs are held .
• An increase in aggregate demand (given no change in aggregate supply) will cause                            inflation.
• under fisher's quantity theory of money,M denoted
• The quantity theory of money is expressed by the identity equation:
• In the quantity theory of money, P and Y represent the price and quantity of: