Question

Q24) In the IS-LM model, a decrease in
the interest rate would be the result of a*
O
increase in the money supply
increase in government purchases
decrease in taxes
increase in money demand​

Answer 1

Answer:

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Answer 2

It is a result of increase in the money supply

• The model offers a different perspective on determining the amount of short-run real gross domestic product in the economy, assuming that the price level remains constant.
• The interest rate is the price putting market into equilibrium when the monetary authority chooses the money supply. If central bank sets an interest rate goal, money market tells what the money supply should be.
• Because the interest rate reflects an opportunity cost of retaining money, the rule of demand holds. that as interest rate rises, the money requested falls. Money, is less useful as a store of value when interest rates are higher.