Economics · 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 money multiplier will be larger if the demand for money is more interest elastic.
- 2The money multiplier will be larger if the demand for capital goods is more interest elastic.✓
- 3The fiscal policy multiplier will be larger if the demand for money is less interest elastic.
- 4The fiscal policy multiplier will be larger if the demand for investment goods is less interest elastic.
Correct answer
The money multiplier will be larger if the demand for capital goods is more interest elastic.
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