UCR--Econ 103--Hwk 3+Answers

UCR--Econ 103--Hwk 3+Answers - Econ 103 Hwk 3(100 points...

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Econ 103 Hwk 3 (100 points) Name: __________________________ TA Name: Due Date: Wednesday June 1 st . Place: TA office / drop box (By 7:00 pm) Multiple Choice (3 pts each) Use the following to answer questions 1-2: Exhibit: IS-LM Fiscal Policy 1. (Exhibit: IS-LM Fiscal Policy) Based on the graph, starting from equilibrium at interest rate r 1 and income Y 1 , a decrease in government spending would generate the new equilibrium combination of interest rate and income: A) r 2 , Y 2 B) r 3 , Y 2 C) r 2 , Y 3 D) r 3 , Y 3 2. (Exhibit: IS-LM Fiscal Policy) Based on the graph, starting from equilibrium at interest rate r 1 and income Y 1 , an increase in government spending would generate the new equilibrium combination of interest rate and income: A) r 2 , Y 2 B) r 3 , Y 2 C) r 2 , Y 3 D) r 3 , Y 3 Page 1
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3. If MPC = 0.75 (and there are no income taxes) when G increases by 100, then the IS curve for any given interest rate shifts to the right by:
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