Economics · Macroeconomics
In the IS-LM model, an increase in government spending will:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Shift the IS curve to the left, reducing output and interest rates.
- 2Shift the IS curve to the right, increasing output and interest rates.✓
- 3Shift the LM curve upward, raising interest rates but lowering output.
- 4Not affect output or interest rates.
Correct answer
Shift the IS curve to the right, increasing output and interest rates.
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