Suppose there is a reduction in expected future output. This will ...

[Jipu 123]

Suppose there is a reduction in expected future output. This will cause which of the following to occur?
 
  A) the IS curve to shift left in the current period
  B) the IS curve to shift right in the current period
  C) the LM curve to shift up in the current period
  D) the LM curve to shift down in the current period

Question 2

The collapse of the subprime mortgage market increased the spread between Baa and default-free U.S. Treasury bonds. This is due to
 
  A) a reduction in risk.
  B) a reduction in maturity.
  C) a flight to quality.
  D) a flight to liquidity.

[Loise Hard]

Answer to Question 1

A

Answer to Question 2

C

[Jipu 123]

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[tuate]

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