Question 1

An increase in autonomous investment causes the ____ and _____ curves to shift to the right.

Accepted Answer

A)  IS, LM 
B)  IS, AD 
C)  LM, AD 
D)  none of the above 
A)  IS, LM 
B)  IS, AD 
C)  LM, AD 
D)  none of the above

Question 2

The price level will fall if output is _____ its natural rate.

Accepted Answer

A)  above 
B)  below 
C)  equal to 
D)  cannot be determined 
A)  above 
B)  below 
C)  equal to 
D)  cannot be determined

Question 3

An increase in autonomous consumption shifts AD to the right.

Accepted Answer

A) True 
 B)False

Question 4

The AD curve shifts in the same direction as the IS curve but the opposite direction from the LM curve.

Accepted Answer

A) True 
 B)False

Question 5

An increase in which of the following would shift IS to the right and AD to the left?

Accepted Answer

A)  price level 
B)  government spending 
C)  investment 
D)  none of the above 
A)  price level 
B)  government spending 
C)  investment 
D)  none of the above

Question 6

The AD curve

Accepted Answer

A)  represents IS-LM equilibrium points. 
B)  shifts opposite from the IS or LM curves. 
C)  both a and b 
D)  none of the above 
A)  represents IS-LM equilibrium points. 
B)  shifts opposite from the IS or LM curves. 
C)  both a and b 
D)  none of the above

Question 7

If money is neutral, then a tax cut would have the effect of

Accepted Answer

A)  raising output. 
B)  raising the interest rate. 
C)  lowering the price level. 
D)  all of the above. 
A)  raising output. 
B)  raising the interest rate. 
C)  lowering the price level. 
D)  all of the above.

Question 8

A decrease in output shifts the LM curve to the right.

Accepted Answer

A) True 
 B)False

Question 9

An increase in taxes causes equilibrium output to _____ and the equilibrium interest rate to

Accepted Answer

A)  rise, rise. 
B)  rise, fall. 
C)  fall, rise. 
D)  fall, fall. 
A)  rise, rise. 
B)  rise, fall. 
C)  fall, rise. 
D)  fall, fall.

Question 10

The IS-LM model predicts that policy makers are greatly influential.

Accepted Answer

A) True 
 B)False

Question 11

In the IS-LM model, policy is said to be ineffective in the long run because it cannot change

Accepted Answer

A)  the price level. 
B)  output. 
C)  the interest rate. 
D)  all of the above. 
A)  the price level. 
B)  output. 
C)  the interest rate. 
D)  all of the above.

Question 12

If financial panics are the greatest concern for monetary policymakers, an interest rate target is superior to a money supply target.

Accepted Answer

A) True 
 B)False

Question 13

The IS-LM model implies that output always returns to the natural rate in the long run.

Accepted Answer

A) True 
 B)False

Question 14

Show the effect of an increase in (autonomous) investment on an IS-LM graph (in the short run).

Accepted Answer

IS shifts to the rig

Question 15

If the IS curve is unstable, output will be more stable if the monetary authority targets the money supply.

Accepted Answer

A) True 
 B)False

Question 16

Any shift in IS or LM has an equivalent shift in AD.

Accepted Answer

A) True 
 B)False

Question 17

The AD slopes down due to the affect of the price level on consumption.

Accepted Answer

A) True 
 B)False

Question 18

The LM curve shifts because of changes in

Accepted Answer

A)  the money demand. 
B)  inflation. 
C)  taxes. 
D)  none of the above. 
A)  the money demand. 
B)  inflation. 
C)  taxes. 
D)  none of the above.

Question 19

An increase in the interest rate causes the currency to appreciate and shifts the IS curve to the left.

Accepted Answer

A) True 
 B)False

Question 20

During a financial panic, the LM curve shifts to the left.

Accepted Answer

A) True 
 B)False

Exam 22: Is-Lm in Action

An increase in autonomous investment causes the ____ and _____ curves to shift to the right.

The price level will fall if output is _____ its natural rate.

An increase in autonomous consumption shifts AD to the right.

The AD curve shifts in the same direction as the IS curve but the opposite direction from the LM curve.

An increase in which of the following would shift IS to the right and AD to the left?

The AD curve

If money is neutral, then a tax cut would have the effect of

A decrease in output shifts the LM curve to the right.

An increase in taxes causes equilibrium output to _____ and the equilibrium interest rate to

The IS-LM model predicts that policy makers are greatly influential.

In the IS-LM model, policy is said to be ineffective in the long run because it cannot change

If financial panics are the greatest concern for monetary policymakers, an interest rate target is superior to a money supply target.

The IS-LM model implies that output always returns to the natural rate in the long run.

Show the effect of an increase in (autonomous) investment on an IS-LM graph (in the short run).

If the IS curve is unstable, output will be more stable if the monetary authority targets the money supply.

Any shift in IS or LM has an equivalent shift in AD.

The AD slopes down due to the affect of the price level on consumption.

The LM curve shifts because of changes in

An increase in the interest rate causes the currency to appreciate and shifts the IS curve to the left.

During a financial panic, the LM curve shifts to the left.

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Rational Expectations Redux: Monetary Policy Implications

Filters

An increase in autonomous investment causes the and _ curves to shift to the right.