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Questions › JNU › JNU SSS 2016 › Q32
1 markMacroeconomics › IS-LM model › Fiscal policy and crowding out in IS-LMHardabout 2 min

JNU SSS 2016 Question 32: IS-LM model

In the IS-LM model, 'crowding out effect' will not happen if

  1. money supply is fixed
  2. money supply is adjustable
  3. economy is saddled in the 'liquidity trap'
  4. money demand is only for transaction purposes Which of the above is/are true?

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IS-LM model has come up 137 times in 7 exams since 2004.

What this question tests

This question is on Fiscal policy and crowding out in IS-LM, part of IS-LM model in Macroeconomics.

How government spending and taxes move income and the interest rate, and how much private spending is displaced.

TestStop has 17 past-paper questions on this subtopic.

Practise IS-LM modelMore on Fiscal policy and crowding out in IS-LM

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