Exam 27: The ISLM Model

An autonomous increase in money demand,other things equal,shifts the ________ curve to the ________.

If the Federal Reserve conducts open market ________,the money supply ________,shifting the LM curve to the left,everything else held constant.

A decrease in the quantity of money supplied shifts the money supply curve to the ________,and the equilibrium interest rate ________,everything else held constant.

As interest rates rise,the opportunity cost of holding money ________ and the demand for money ________.

Which of the followings does NOT describe the money market in the ISLM model?

Everything else held constant,an expansionary ________ policy will cause the interest rate to rise,while an expansionary ________ policy will cause the interest rate to fall.

In the long-run ISLM model and with everything else held constant,the long-run effect of a fall in net exports is to ________ real output and ________ the interest rate.

In the basic closed-economy ISLM model,as the interest sensitivity of money demand increases,fiscal policy has ________ effect on output and monetary policy has ________ effect on output.

If the economy is on the LM curve,but is to the left of the IS curve,aggregate output will ________ and the interest rate will ________.

In the basic closed-economy ISLM model,the money market can be described by the

In the long-run ISLM model and with everything else held constant,the long-run effect of an expansionary monetary policy is to

Everything else held constant,if aggregate output is to the ________ of the LM curve,then there is an excess demand of money which will cause the interest rate to ________.

The money market is in equilibrium

The ________ describes the combinations of interest rates and aggregate output for which the quantity of money demanded equals the quantity of money supplied.

Using the ISLM model,explain the effects of a monetary expansion combined with a fiscal contraction. How do the equilibrium level of output and interest rate change?

In the basic closed-economy ISLM model,the money demand is a function of

If the economy is characterized by a stable IS curve and an unstable LM curve,then ________ target produces ________ fluctuations in aggregate output.

If the economy is on the IS curve,but is to the left of the LM curve,then the ________ market is in equilibrium,but the interest rate is ________ the equilibrium level.

An autonomous decrease in money demand,other things equal,shifts the ________ curve to the ________.

Because inflation was not a serious problem during the Great Depression,Keynes's analysis assumed