Match the following in relation to IS-LM approach: List-I Efficacy of fiscal policy List -II IS-LM 1.…
In the classical range, a fiscal expansion raises interest without increasing income; in the intermediate range, both income and interest rise. In the Keynesian range,…
Choose your answer
Match the following in relation to IS-LM approach:
| List-I Efficacy of fiscal policy | List -II IS-LM |
| 1. Fiscal policy increases the rate of interest only | a. Increase in Government Expenditure |
| 2. Fiscal policy increases the level of income and interest rate | b. Classical Range |
| 3. Fiscal policy increases the level of income only | c. Intermediate range |
| 4. Rightward shift in IS | d. Keynesian range |
Answer and explanation
Correct answer D
In the classical range, a fiscal expansion raises interest without increasing income; in the intermediate range, both income and interest rise. In the Keynesian range, income rises without an increase in interest, and higher government expenditure shifts IS rightward, giving 1-b, 2-c, 3-d, 4-a.
Practice for these exams
-
Telangana SET (TG SET)