Exam 27: The ISLM Model

If the ________ curve is relatively more unstable than the ________ curve,a money supply target is preferred.

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

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

An increase in the quantity of money supplied shifts the money supply curve to the ________ and the LM curve to the ________,everything else held constant.

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

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

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

An expansionary monetary policy shifts the LM curve to the ________,reducing ________,everything else held constant.

Show graphically and explain why targeting an interest rate is preferable when money demand is unstable and the IS curve is stable.

A decline in the money ________ shifts the LM curve to the ________,causing the interest rate to rise and output to fall,everything else held constant.

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

In the ISLM framework,an expansionary monetary policy causes aggregate output to ________ and the interest rate to ________,everything else held constant.

The situation in which expansionary fiscal policy does not lead to a rise in aggregate output is referred to as

The rate of output at which the price level has no tendency to rise or fall is called the

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

Using the ISLM model,show graphically and explain the effects of a monetary contraction. What is the effect on the equilibrium interest rate and level of output?

In the money market,a condition of excess demand for money can be eliminated by a ________ in aggregate output or a ________ in the interest rate,everything else held constant.

An increase in the money ________ shifts the LM curve to the ________,causing the interest rate to fall and output to rise,everything else held constant.

In the open-economy ISLM model,the goods market equilibrium condition is

In the long-run ISLM model and with everything else held constant,the long-run effect of an expansionary fiscal policy is to ________ real output and ________ the interest rate.