Question

and that crediters have 1. The debt deflaticn hypothesis explains the fall in income as a consequence of usexpected deftation transferring weath propensity te consume than debtors O frem debtors to creditors; a smaller O frem debtors to creditors; a larger O from credibors to debtors; a smaller O from eredbors to debtors; a larger 2. using the 1s-4M analyslie, the L Olarger than the multiplier Othe same as the multiplier O smaller than the multipler curve it not horizental, the mutipler for an increace in govenment oponding i for an increase in government purchaces using the Keynedias-crose analysie Osometimes larger and sometimes smaller than the multipier 3. (Exhibit: IS-LM Fiscal Policy) Istret ra InoneOup ased on the graph, starting from equisbrium at interest ratey and income Y, an incraase in govemment spending would generate the new equilitrium combination of interest rate and inceme O O n O O s 4. The aggrepate demand curve generaly slopes dewnward and to the right because, for any given money supply M, a higher price level P causes a real meney supply M/P, which the interest rate asd spendings O lower ralses; reduces Ohigher; lowers; increases O lower lowers increases O nigher; raises; reduces

Answer 1

1. Ans - from debtors to creditors; a smaller

2. Ans - smaller than the multiplier

3. Ans - r2, Y3

4. Ans - lower; raises; reduces