Economics · Fiscal Policy
Regarding fiscal policy, consider the following statements: 1. An increase in government expenditure shifts the IS curve to the right. 2. Fiscal policy is less effective when the LM curve is steep (interest inelastic money demand). 3. The balanced budget multiplier states that an equal increase in G and T raises Y by the full amount of the increase. Which are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 11, 2 and 3✓
- 21 only
- 32 and 3 only
- 41 and 3 only
Correct answer
1, 2 and 3
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