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An increase in investment spending because companies become more optimistic about
investment profitability causes the aggregate demand function to shift up, the equilibrium level
of aggregate output to ____, and the IS curve to shift to the ____, everything else held
constant.
A) rise; left
B) rise; right
C) fall; left
D) fall; right
Answer: B
Diff: 2 Type: MC Page Ref: 564
Skill: Recall
Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
the interest rate
A decrease in autonomous planned investment spending, other things equal, shifts the
____ curve to the ____.
A) IS; right
B) IS; left
C) MP; left
D) MP; right
Answer: B
Diff: 2 Type: MC Page Ref: 564
Skill: Recall
Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
the interest rate
An increase in government spending causes the equilibrium level of aggregate output to
____ at any given interest rate and shifts the ____ curve to the ____, everything
else held constant.
A) rise; MP; right
B) rise; IS; right
C) fall; IS; left
D) fall; MP; left
Answer: B
Diff: 2 Type: MC Page Ref: 564
Skill: Recall
Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
the interest rate