In the IS-LM model, an increase in government spending in the goods market impacts the money market because it leads to ________.
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UoH 2020 Question 68: IS-LM model
Answer and worked solution
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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.
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