Question

Study the following diagram and answer the question. Assume that the economy is initially in a position where output is equal to potential output Y_n. Which of the following statements is correct? Assume that the shift of the IS curve to the right is because of an increase in government spending. If government spending increases without increasing the interest rate, the new equilibrium level of output and income is ___ Select one: A. now Y1, consumption spending has increased, investment spending has decreased, and the exchange rate is unchanged. B. now Y2, consumption spending has increased, investment spending has decreased, and the exchange rate appreciated. C. now Y2, consumption spending and investment spending have increased, and the exchange rate appreciated. D. now Y1, consumption spending and investment spending has increased, and the exchange rate is unchanged.

          Study the following diagram and answer the question. Assume that the economy is initially in a position where output is equal to potential output Y_n.

Which of the following statements is correct?
Assume that the shift of the IS curve to the right is because of an increase in government spending. If government spending increases without increasing the interest rate, the new equilibrium level of output and income is ___
Select one:
A. now Y1, consumption spending has increased, investment spending has decreased, and the exchange rate is unchanged.
B. now Y2, consumption spending has increased, investment spending has decreased, and the exchange rate appreciated.
C. now Y2, consumption spending and investment spending have increased, and the exchange rate appreciated.
D. now Y1, consumption spending and investment spending has increased, and the exchange rate is unchanged.

Study the following diagram and answer the question. Assume that the economy is initially in a position where output is equal to potential output Yn.

Which of the following statements is correct?
Assume that the shift of the IS curve to the right is because of an increase in government spending. If government spending increases without increasing the interest rate, the new equilibrium level of output and income is
Select one:
A. now Y1, consumption spending has increased, investment spending has decreased, and the exchange rate is unchanged.
B. now Y2, consumption spending has increased, investment spending has decreased, and the exchange rate appreciated.
C. now Y2, consumption spending and investment spending have increased, and the exchange rate appreciated.
D. now Y1, consumption spending and investment spending has increased, and the exchange rate is unchanged.

Added by Olwetu O.

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