Respuesta :
According to the IS-LM model, if congress increases government spending but the fed wants to hold output constant, then the fed should decrease the money supply.
About IS-LM models
The IS-LM model, which stands for "investment-savings" (IS) and "liquidity preference-money supply" (LM) is a Keynesian macroeconomic model that shows how markets for goods (IS) economy interacts with the market for loanable funds. (LM) or money market .
It is represented as a graph where the IS and LM curves intersect to show short-run balance between interest rates and output.
The three critical exogenous variables, namely external, in the IS-LM model are liquidity, investment, and consumption. In theory, liquidity is determined by the size and speed of the money supply. Level of investment and consumption are determined by the marginal decisions of each actor.
The IS-LM chart examines the relationship between output, or gross domestic product (GDP), and interest rates . The whole economy is boiled down to just two markets, output and money; and respectively supply and demand characteristics push the economy toward the equilibrium point
Learn more about IS LM model at https://brainly.com/question/28341864.
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