• The IS–LM model characterises the implications of equilibrium in:

What is the impact of the following changes in macroeconomic policy on the IS and the LM curve?

The crowding-out effect could be reduced if an expansionary fiscal policy was:

The intersection of the IS and LM curves shows the output and interest rates levels where the public budget is in balance.

The larger the sensitivity of investment demand to the interest rate

If the IS curve is very steep,:

According to the IS-LM model an increase in government spending leads to a decrease in investment.

The IS curve is downward-sloping because goods market equilibrium implies that an increase in taxes leads to a lower level of output.

A combination of fiscal and monetary policies that increases production and keeps the interest rates unchanged consists in:

According to the IS-LM model, what happens to the interest rate and production under the following circumstances?