Exam 4: Strong and Weak Policy Effects in the Is-Lm Model

Which of the following events occur when fiscal expansion is used without accommodating monetary policy?

A steep LM curve implies that

If there is unplanned inventory accumulation there is excess

The three functions of money are

Fiscal policy makers may indirectly control the money supply if

In the IS-LM model,equilibrium income can be affected by

An increase in the marginal propensity to consume would cause the IS curve to

Moving upward along an LM curve,________ quantity of real money balances is equally demanded as higher real incomes are accompanied by ________ interest rates.

If the level of interest rates paid on time deposits rise relative to that paid by money market accounts,ceteris paribus,individual will

Crowding-out is eliminated when the LM curve is ________,so that expansionary fiscal policy ________ the interest rate.

In a "liquidity trap,"

"Since checking accounts now pay interest they should not be included in the money supply." Given that checks are the major medium of exchange,this statement is false because

Figure 4-7 -Using the information contained in Figure 4-7 above,the initial equilibrium Y is 3500.If there is 500 of new fiscal stimulus and a constant money supply,Y will increase to ________ and the interest rate will ________.

Which of the following would cause the IS curve to shift?

As income and production rise,the demand for real money balances will ________ and interest rates will ________.

During the 1990s,Japan's economy experienced

The IS curve would be vertical if

Since the velocity of money increases as interest rates rise the

Autonomous planned spending includes five components of which two are dependent on the interest rates.These are

Which of the following would shift the LM curve?