High differentials in interest rates suggest that the financial markets of New England, the Middle Atlantic and the South were not integrated with those of New York City.
Indicate whether the statement is true or false
Question 2
In the IS-LM model, an increase in government spending in the goods market has an impact on the money market because
a. it increases the money supply.
b. it increases income, which increases money demand.
c. it decreases income, which decreases money demand.
d. it increases interest rates, which decreases money demand.
e. none of the above.
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