Macroeconomics

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Positive Consumption Shift

MACRO-GYBWY6

Assume that consumers in an economy become more confident and increase their spending. According to the IS/LM analysis what will happen to interest rates and output?

A

Interest rates rise and output falls

B

Interest rates rise and output rises

C

Interest rates fall and output falls

D

Interest rates fall and output rises

E

There is no change to interest rates and output