Figure 4-8

-If Figure 4-8 above is to show the result of a "fully accommodating" monetary policy following a shift of the IS curve from IS₀ to IS₁,what is the initial level of real income and interest rate before these changes?
A)3500;7.5%.
B)4500;12.5%.
C)5500;7.5%.
D)4500;2.5%.

Question

Figure 4-8
 
-If Figure 4-8 above is to show the result of a "fully accommodating" monetary policy following a shift of the IS curve from IS₀ to IS₁,what is the initial level of real income and interest rate before these changes?
A)3500;7.5%. 
B)4500;12.5%. 
C)5500;7.5%. 
D)4500;2.5%.

Quizplus · Accepted Answer

The initial level of real income and interest rate before the changes, indicated by the intersection of the IS₀ curve with the LM curve, corresponds to the values provided in option C, which are 5500 for real income and 7.5% for the interest rate.

Figure 4-8 -If Figure 4-8 Above Is to Show the Result of Show