Assume that the current demand for goods depends on expectations in the IS-LM model. A monetary contraction in the current period will cause a leftward shift in the IS curve if: O current and expected future real interest rates are positively related current and expected future real interest rates are negatively related monetary policy cannot affect, directly or indirectly, the position of the IS curve in the current period the central bank is expected to reverse any current movements in monetary policy in the future current and expected future real interest rates are unrelated

Assume that the current demand for goods depends on expectations in the IS-LM model. A monetary contraction in the current period will cause a leftward shift in the IS curve if: O current and expected future real interest rates are positively related current and expected future real interest rates are negatively related monetary policy cannot affect, directly or indirectly, the position of the IS curve in the current period the central bank is expected to reverse any current movements in monetary policy in the future current and expected future real interest rates are unrelated

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume that the current demand for goods depends on expectations in the IS-LM
model. A monetary contraction in the current period will cause a leftward shift in
the IS curve if:
O
O
current and expected future real interest rates are positively related
current and expected future real interest rates are negatively related
monetary policy cannot affect, directly or indirectly, the position of the IS curve
in the current period
the central bank is expected to reverse any current movements in monetary
policy in the future
current and expected future real interest rates are unrelated

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