Question: In a closed economy, if the government decides to increase its spending without altering taxes, which of the following scenarios is likely to occur according to the IS-LM model? (a) The interest rate will decrease, leading to an increase in investment. (b) The LM curve will shift to the left, resulting in a decrease in the general price level. (c) The IS curve will shift to the right, potentially causing the interest rate to rise and crowding out private investment. (d) The aggregate demand will decrease, leading to a decrease in output in the short run.