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in the IS-LM model a contractionary monetary policy leads to: an increase in government spending and the level of of output b.

in the IS-LM model a contractionary monetary policy leads to:

a. an increase in government spending and the level of of output 

b. an increase in the demand for money an increase in the interest rate and a decrease in government spending

c. a decrease in the supply of money an increase in the interest rate and an increase in investment spending

1. none of the above 

2. a

3.c

4. b c

5. a b

please explain the right combination

Top Answer

4. b c a contractionary policy is meant to reduce the  money supply thus:   there will be an... View the full answer

1 comment
  • reduced miney supply will cause increase in interest rates thus making borrowing expensive
    • brayotutor
    • Apr 27, 2016 at 8:45am

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The way to approach this... View the full answer

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