Question

In the IS-LM model when government spending rises, in the short-run equilibrium, in the usual case the interest rate __________ and output ___________

Answer 1

In the IS-LM model when government spending rises, in the short-run equilibrium, in the usual case the interest rate rises and output rises.

What Is the IS-LM Model?

The IS-LM version, which stands for "investment-savings" (IS) and "liquidity preference-cash supply" (LM) is a Keynesian macroeconomic version that suggests how the marketplace for monetary goods (IS) interacts with the loanable finances marketplace (LM) or cash marketplace.

It is represented as a graph wherein the IS and LM curves intersect to reveal the short-run equilibrium among hobby charges and output.

Your question is incomplete, but most probably your full question was:

In the IS-LM version while authorities spending rises, in short-run equilibrium, withinside the typical case, the interest rate ______ and output ______.

1. rises; falls
2. rises; rises
3. falls; rises
4. falls; falls

Hence, the appropriate alternative is rises; rises.

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