In the IS-LM framework, under general recessionary condition, as government expenditure (G) rises.
A. As Bond price (pb) falls, rate of interest (r) rises, reducing the level of investment (I).
B. Aggregate demand for commodities rises, raising the level of aggregate output & income (Y).
C. Fall in private investment (1) reduces aggregate income.
D. People sell bond (b) to get money & hence bond supply (Bs) rises, reducing bond price (pb).
E. Transaction demand for money (L1) rises, creating money demand greater than money supply (L > M).
Choose the correct answer from the options given below:
1
A, B, C, D, E
2
B, E, D, A, C
3
B, D, E, C, A
4
E, B, A, D, C