Exhibit

Exhibit: Policy Interaction Interest rate. :- Y. Y3 Y; 1'. Income. OutIJI-ILY 3. (Exhibit: Policy Interaction) Based on the graph, starting from equilibrium at interest rate r3, income 1'2, 131, and LM, if there is an increase in government spending that shis the IS curve to 182, then in order to keep the interest rate constant, the Federal Reserve should the money supply shifting to A) increase; LM: B) decrease; Lilia C) increase; LMS D) decrease; LM: 4. (Exhibit: Policy Interaction) Based on the graph, starting 'om equilibrium at interest rate 73, income Y2, I81, and LM], if there is an increase in government spending that shis the IS came to 132, then in order to keep output constant, the Federal Reserve should the money supply shitting to A) increase; LMz B) decrease; LM C) increase; LMs D) decrease; LM 5. (Exhibit: Policy Interaction) Based on the graph, starting from equilibrium at interest rate r3, income 1'2, 131, mm, ifthere is an increase in govemment spending that shis the IS curve to IS: and the Federal Reserve does not change the money supply, the new equilibrium combination of interest and income will be A) r1, Y2 B) n, Y3 C) r3, Y3 D) r3, Y4