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Determine whether each of the following statements is true, false, or uncertain. Explain your answer carefully. Include an IS-LM diagram in your explanations for each
- Determine whether each of the following statements is true, false, or uncertain. Explain your answer carefully. Include an IS-LM diagram in your explanations for each part.
- An exogenous increase in saving raises investment
- An increase in government spending reduces disposable income
- An exogenous reduction in money demand raises investment spending but reduces saving
- Because of the crowding out effect, an increase in government spending may lead to no change in equilibrium income
- The greater the sensitivity of investment to changes in the interest rate, the greater is the effect on monetary policy on GDP
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