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

A change in the multiplier (k)will change the

Suppose the Fed changes the interest rate in an attempt to raise planned investment.But in spite of this,planned investment remains unchanged.The most likely explanation is that

If spending is NOT responsive to changes in the interest rate,then the

A vertical IS curve comes from the assumption that changes in the interest rate do NOT affect

From any point above the current LM curve,money market equilibrium can be restored by some combination of a ________ income and a ________ interest rate.

A "easy" money,tight "fiscal" policy combination will be preferred by society which values

If the interest rate were to rise,we expect that

A flat LM curve implies that

One of the major chains of causation in macroeconomic policymaking is government manipulation of ________ in order to affect ________,and thus ultimately ________.

The money supply is controlled by the

With normally-sloped IS and LM curves,an increase in government expenditure ________ consumption expenditure since autonomous consumption ________ while induced consumption ________.

Given the level of real GDP,the equilibrium level of the interest rate depends on the

A flat IS curve implies that

An increase in the money supply will

With normally-sloped IS and LM curves,an increase in government spending ________ the interest rate,which ________ autonomous planned expenditure,resulting in a final increase in income ________ than what the government spending increase would have produced in the Chapter 3 model.

In the IS-LM model,the fiscal multiplier effect can be increased by

A change in the interest rate will generally affect the

Holding nonmonetary assets and converting them to money when necessary is justifiable so long as

Figure 4-5 -In Figure 4-5 above,people would be trying to increase their holdings of money at

The economy is in short-run equilibrium