Exam 6: Macroeconomics Without Microeconomic Foundations

In the IS-LM model, if investor sentiments deteriorate, then, in order to prevent a recession, public spending should:

In the IS-LM model the equilibrium level of the interest rate depends on:

If the price level, P, gets lower the LM curve will:

Along the LM curve, the level of output that clears the money market increases in:

Why can fiscal policy help the economy out of a liquidity trap?

According to the IS-MP-PC model, a higher level of past inflation causes

Along the IS curve, the level of output that clears the goods market decreases in:

According to the IS-LM model, in a liquidity trap an increase in money supply causes the interest rate to:

According to the IS-MP-PC model, an inflationary monetary policy causes

According to the Phillips curve with extrapolative expectations, a decrease in period t output generates:

If the money supply increases. then in the new equilibrium the nominal interest rate:

If the level of government spending, G, decreases, the IS curve will:

If the level of taxes, T, decreases, the LM curve will:

According to the IS-MP-PC model, an increase in public expenditure, G, fully funded by an increase in taxation, T, causes

In the IS-LM model, if investor sentiments deteriorate, then, in order to prevent a recession, money supply should:

In the IS-LM model as the taxes increase then:

According to the IS-LM model, in a liquidity trap an increase in taxation, T, causes the level of output, Y, to:

According to the IS-LM model, how shall the government respond to a recession determined by a deterioration of investor sentiments without increasing budget deficit, G-T?

What are the long and short run effects of a permanent increase in government spending according to the general IS-MP-PC (AD-AS) model?

According to the general MP rule of the IS-MP-PC model, a 1% increase in the inflation target of the central bank will cause the central bank to: