In the IS-LM model,if interest rates fall while output falls the
A)money supply must have fallen.
B)price level must have fallen.
C)money supply must have risen.
D)level of government spending must have risen.
E)none of the above.

Question

Quizplus · Accepted Answer

In the IS-LM model, a simultaneous fall in interest rates and output typically indicates a leftward shift in the IS curve, which could be due to a decrease in investment or government spending, or a leftward shift in the LM curve due to a decrease in money supply. However, none of the given options directly explain this scenario.

In the IS-LM Model,if Interest Rates Fall While Output Falls