Consider the economy in the short run

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Reference no: EM131001901

Decide if the following statements are TRUE, FALSE, OR UNCERTAIN. Explain your reasoning in each case. Consider the economy in the short run.

A. If government spending and taxes are reduced by the same amount, there will be no net shift in the IS curve.

B. The LM curve is upward sloping because a higher level of the money supply is needed to raise real output.

C. An expanding economy must be accompanied by falling interest rates.

D. An increase in government spending leads to a decrease in investment.

E. It is possible for a fiscal contraction to occur while the economy is expanding if the appropriate policy mix is in place.

Reference no: EM131001901

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