Which of the following statements concerning Keynesian ISLM analysis is true?
A) For a given change in taxes, the IS curve will shift less than for an equal change in government spending.
B) Changes in net exports arising from a change in interest rates causes a shift in the IS curve.
C) A fall in the money supply shifts the LM curve to the right.
D) Expansionary fiscal policy will cause the interest rate to fall.

Question

Quizplus · Accepted Answer

In Keynesian IS-LM analysis, a change in government spending has a more direct and larger impact on the IS curve compared to an equal change in taxes, due to the multiplier effect.

Which of the Following Statements Concerning Keynesian ISLM Analysis Is