TRUE or FALSE
1. The position of the IS curve maybe affected by the size of government spending.
2. The smaller the multiplier and the less sensitive investment spending is to changes in interest rate, the steeper is the IS curve.
3. Points to the right of the IS curve means that income or output is so high that for a given rate of interest, aggregate demand falls short of output.
4. The LM curve is positively sloped. An increase in the interest rate reduces demand for real balances. To maintain equilibrium in the money market, the level of income must fall.