Question 1

After a temporary beneficial supply shock hits the economy,general equilibrium is restored by

Accepted Answer

A) a shift down and to the left of the IS curve. 
B) a shift to the left of the FE line. 
C) a shift up and to the left of the LM curve. 
D) a shift down and to the right of the LM curve. 
A) a shift down and to the left of the IS curve. 
B) a shift to the left of the FE line. 
C) a shift up and to the left of the LM curve. 
D) a shift down and to the right of the LM curve.

Question 2

Suppose the intersection of the IS and LM curves is to the left of the FE line.What would most likely eliminate a disequilibrium among the asset,labor,and goods markets?

Accepted Answer

A) A rise in the price level, shifting the LM curve up and to the left 
B) A fall in the price level, shifting the LM curve down and to the right 
C) A rise in the price level, shifting the IS curve up and to the right 
D) A fall in the price level, shifting the IS curve down and to the left 
A) A rise in the price level, shifting the LM curve up and to the left 
B) A fall in the price level, shifting the LM curve down and to the right 
C) A rise in the price level, shifting the IS curve up and to the right 
D) A fall in the price level, shifting the IS curve down and to the left

Question 3

Banks decide to raise the interest rate they pay on checking accounts from 1% to 2%.This action would

Accepted Answer

A) increase money demand, shifting the LM curve up and to the left. 
B) increase money demand, shifting the LM curve down and to the right. 
C) decrease money demand, shifting the LM curve up and to the left. 
D) decrease money demand, shifting the LM curve down and to the right. 
A) increase money demand, shifting the LM curve up and to the left. 
B) increase money demand, shifting the LM curve down and to the right. 
C) decrease money demand, shifting the LM curve up and to the left. 
D) decrease money demand, shifting the LM curve down and to the right.

Question 4

Under monetary neutrality,an increase in the money supply causes output to ________ and the price level to ________.

Accepted Answer

A) rise; rise 
B) rise; not change 
C) not change; not change 
D) not change; rise 
A) rise; rise 
B) rise; not change 
C) not change; not change 
D) not change; rise

Question 5

For each outcome below,tell what type of shift must have taken place in either the aggregate demand curve or the long-run aggregate supply curve.
(a)In the short run,the price level is unchanged and output rises.
(b)In the long run,the price level declines and output is unchanged.
(c)In the long run,the price level rises and output declines.

Accepted Answer

(a)The aggregate demand curve

Question 6

The LM curve

Accepted Answer

A) is horizontal. 
B) is vertical. 
C) slopes downward. 
D) slopes upward. 
A) is horizontal. 
B) is vertical. 
C) slopes downward. 
D) slopes upward.

Question 7

For each of the following changes,what happens to the real interest rate and output in the very short run,before the price level has adjusted to restore general equilibrium?
(a)Wealth declines.
(b)Money supply declines.
(c)The future marginal productivity of capital declines.
(d)Expected inflation rises.
(e)Future income rises.

Accepted Answer

(a)The IS curve shifts down and to the l

Question 8

When the money supply rises by 10%,in the short run,output ________ and the price level ________.

Accepted Answer

A) rises; is unchanged 
B) declines; falls 
C) is unchanged; falls 
D) declines; is unchanged 
A) rises; is unchanged 
B) declines; falls 
C) is unchanged; falls 
D) declines; is unchanged

Question 9

The aggregate demand curve

Accepted Answer

A) is vertical. 
B) slopes upward. 
C) is horizontal. 
D) slopes downward. 
A) is vertical. 
B) slopes upward. 
C) is horizontal. 
D) slopes downward.

After a temporary beneficial supply shock hits the economy,general equilibrium is restored by

Suppose the intersection of the IS and LM curves is to the left of the FE line.What would most likely eliminate a disequilibrium among the asset,labor,and goods markets?

Banks decide to raise the interest rate they pay on checking accounts from 1% to 2%.This action would

Under monetary neutrality,an increase in the money supply causes output to and the price level to .

The LM curve

When the money supply rises by 10%,in the short run,output and the price level .

The aggregate demand curve

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 9: The Is-Lmad-As Model

After a temporary beneficial supply shock hits the economy,general equilibrium is restored by

Suppose the intersection of the IS and LM curves is to the left of the FE line.What would most likely eliminate a disequilibrium among the asset,labor,and goods markets?

Banks decide to raise the interest rate they pay on checking accounts from 1% to 2%.This action would

Under monetary neutrality,an increase in the money supply causes output to ________ and the price level to ________.

The LM curve

When the money supply rises by 10%,in the short run,output ________ and the price level ________.

The aggregate demand curve

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Under monetary neutrality,an increase in the money supply causes output to and the price level to .

When the money supply rises by 10%,in the short run,output and the price level .