Ceterus paribus, in the AD/AS/IS/LM model, the short-term effect of an exogenous

Question

Ceterus paribus, in the AD/AS/IS/LM model, the short-term effect of an exogenous increase in G is to increase real income (y) and the interest rate (r). to increase real income (y) and to decrease the interest rate (r). to increase the price level (P) and to decrease real income (y). to decrease the price level (P) and to decrease real income (y). Ceterus paribus, in the AD/AS/IS/LM model, the short-term effect of an exogenous increase in the money supply M is to increase real income and the interest rate. to increase the price level and to reduce investment spending (I). to increase real income and the price level. to reduce interest rates and reduce consumption. Ceterus paribus, in the AD/AS/IS/LM model, the short-term effect of an exogenous increase in the level of autonomous investment (I) is to lower the interest rate. to decrease consumption spending (C). to increase real income. to decrease the price level. Ceterus paribus, in the AD/AS/IS/LM model, the short-term effect of an exogenous increase in the level of autonomous expenditure (Ca) is to increase the interest rate and real income. to increase the price level and to decrease the interest rate. to increase the price level and the quantity of nominal money demanded. to increase real income and decrease the interest rate.

Explanation / Answer

15

c

Because of expansionary gap the level should increase

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