Question

I just needed some extra clarity on some of these questions thank you :

26) An increase in taxes shifts the IS curve, drawn with income along the horizontal axis and the interest rate along the vertical axis: A) downward and to the left. B) upward and to the right. C) upward and to the left. D) downward and to the right.

27) The theory of liquidity preference implies that: A) as the interest rate rises, the demand for money will fall. B) as the interest rate rises, the demand for money will rise. C) the interest rate will have no effect on the demand for money. D) as the interest rate rises, income will rise.

28) An explanation for the slope of the LM curve is that as: A) the interest rate increases, income becomes higher. B) the interest rate increases, income becomes lower. C) income rises, money demand rises, and a higher interest rate is required. D) income rises, money demand rises, and a lower interest rate is required.

29) A decrease in the money supply, other things being equal, will shift the LM curve: A) downward and to the left. B) upward and to the left. C) downward and to the right. D) upward and to the right.

30) According to the Keynesian-cross analysis, if the marginal propensity to consume is 0.6, and government expenditures and autonomous taxes are both increased by 100, equilibrium income will rise by: A) 0 B) 100 C) 150 D) 250

Answer 1