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A reduction 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) fall; IS; left
C) fall; MP; left
D) rise; IS; 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 decline in taxes ____ consumer expenditure and shifts the ____ curve to the
____, everything else held constant.
A) raises; MP; right
B) lowers; IS; left
C) raises; IS; right
D) lowers; MP; left
Answer: C
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
If Canadian college students decide that drinking Mexican-brewed beer helps one get
noticed, net exports will tend to fall, causing aggregate demand to ____ and the ____
curve to shift to the left, everything else held constant.
A) fall; MP
B) fall; IS
C) rise; MP
D) rise; IS
Answer: B
Diff: 2 Type: MC Page Ref: 564
Skill: Applied
Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
the interest rate