Answer TRUE OR FALSE. 1) A combined fiscal consolidation and monetary expansion will lower interest rates...

Answer TRUE OR FALSE.

1) A combined fiscal consolidation and monetary expansion will lower interest rates in the IS-LM model.

2) An increase in government spending leads to a decrease in output in the IS-LM model

3) The LM curve is horizontal at the Reserve Bank's policy choice of the interest rate.

4) When expected inflation increases and there is no change in nominal interest rates then real interest rates fall.

Expert Solution

Rahul Sunny answered 2 years ago

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