Economics · Macroeconomics
In the IS-LM framework, under general recessionary conditions, as government expenditure (G) rises, arrange the following events in the correct sequential order: A. As Bond price (pb) falls, rate of interest (r) rises, reducing the level of investment (I). B. Aggregate demand for commodities rises, raising the level of aggregate output & income (Y). C. Fall in private investment (I) reduces aggregate income. D. People sell bonds (b) to get money & hence bond supply (Bs) rises, reducing bond price (pb). E. Transaction demand for money (L1) rises, creating money demand greater than money supply (L > M). Choose the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1E, B, A, D, C
- 2B, D, E, C, A
- 3B, E, D, A, C✓
- 4A, B, C, D, E
Correct answer
B, E, D, A, C
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