38. (Exhibit: Policy Interaction) Based on the graph, starting from equilibrium at interest rate r3, income Y2, IS1, and LM1, if there is an increase in government spending that shifts the IScurve to IS2and the central bank does not change the money supply, the new equilibrium combination of interest and income will be: A) r1, YB) r2, YC) r3, YD) r3, Y
4.39. Over the last 25 years, the estimates of the one-year expenditure multiplier that have been calculated from macroeconometric models of Canada have fallen from about ______ to about _______.
40. Over the last 25 years, the estimates of the one-year expenditure multiplier that have been calculated from macroeconometric models of Canada have fallen because I: economists have made major progress in their ability to model and simulate how individuals form expectations; II: exchange-rate changes have become increasingly important.
41. An increase in investment demand for any given level of income and interest rates—due, for example, to more optimistic “animal spirits”—will, within the IS–framework, ______ output and ______ interest rates. LM
42. An increase in household saving for any given level of income will shift the: A) LMcurve upward and to the left. B) LMcurve downward and to the right. C) IScurve downward and to the left. D) IScurve upward and to the right.