Economics · Macroeconomics - IS-LM Model
Which of the following statements is NOT correct regarding the Keynesian IS-LM model?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The IS curve slopes downward while the LM curve slopes upward.
- 2Monetary policy is more effective when investment demand is more interest-elastic.
- 3The fiscal policy multiplier will be larger if money demand is less interest-elastic.
- 4The fiscal policy multiplier will be larger if investment demand is less interest-elastic.✓
Correct answer
The fiscal policy multiplier will be larger if investment demand is less interest-elastic.
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