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Education is the most powerful weapon which you can use to change the world
, ECS2602-24-S2 Welcome to the module ECS2602-24-S2 Assessment 2
QUIZ
Question 2
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Marked out of 1.00
This question is based on the following comparison between the impact of an expansionary fiscal policy with a
contractionary monetary policy in the IS-LM model:
Expansionary Contractionary
fiscal policy monetary policy
The demand for goods Higher Lower
The level of output and income Higher Lower
The interest rate Unchanged Higher
Investment spending Higher Lower
Money demand and the quantity of money Higher Lower
Budget deficit Higher Unchanged
The reason for the higher demand for goods and level of output and income for an expansionary fiscal policy is that
_____________ while for a contractionary monetary policy, it is lower since the _______________.
Select one:
A. investment spending is higher; interest rate is lower
B. government spending is lower; interest rate is lower
C. government spending is higher; interest rate is higher
D. investment spending is lower; interest rate is higher
Clear my choice
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