The IS curve will shift to the right if:
a. the government deficit decreases.
b. consumer confidence decreases.
c. the MPC decreases.
d. taxes decrease.
e. the money supply increases.
Question 2
Assuming that the central bank is following a money stock targeted, an exogenous rise in investment demand
a. causes income to rise but the money stock has to be increased to accommodate the expansion.
b. has to be accommodated with open market purchases to expand the money stock.
c. increases income, money demand, and lowers the interest rate.
d. increases income and money demand and lowers the interest rate.
e. none of the above.
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