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

A daily auction at the Chicago Board of Trade sets

On a money demand diagram with the interest rate on the vertical axis,the real money balance demand schedule would be a vertical line under the assumption that

The simple fiscal policy multiplier occurs in the IS-LM model when ________ interest responsiveness of money demand produces a ________ LM curve.

Figure 4-8 -If Figure 4-8 above is to show the result of a "fully accommodating" monetary policy following a shift of the IS curve from IS₀ to IS₁,what is the initial level of real income and interest rate before these changes?

Among all assets,only money can be a

Monetary restraint and fiscal stimulus will

An increase in the money supply will raise equilibrium GDP if the

An increase in the real money supply will have its maximum effect on the equilibrium level of GDP when the

During the expansion phase of the business cycle,business firms become optimistic about their future earning capacity as do banks.Nominal interest rates rise during expansions.Investment lending could be expected to

Figure 4-10 -In Figure 4-10 above,preferring the "easy fiscal,tight money" policy mix at a certain income is why we are at

Figure 4-9 -In Figure 4-9 above,suppose LMA shifts to LMB.The distance from points A to L tells us

If the IS curve is negatively sloped and the LM curve is positively sloped

Figure 4-6 -In Figure 4-6 above,suppose we are initially at point 2.A reduction in government spending causes income to change by ________ and the interest rate to change by ________ than would be the case in the Chapter 3 model.

Which variable is assumed to remain exogenous in all the models constructed in Chapters 3 and 4?

We can infer that the government is following a restrictive fiscal policy when

When the demand for money becomes less responsive to changes in income,the LM curve becomes ________ and it also shifts to the ________.

Suppose the Federal Reserve desires to raise the level of planned investment in the economy.It either has to hope that an improvement in business confidence shifts the rate-of-return line to the ________ ,or it has to take direct action by ________ the interest rate.

The money supply consists of

On a diagram with "calories consumed per day" on the horizontal axis and "exercise per day" on the vertical axis,we can draw a line along which your body weight at this moment will remain constant.This line is analogous to how ________ for changing values of the variables on the two axes.

For a given level of equilibrium GDP,a tight-money/easy-fiscal policy mix compared with easy-money/tight-fiscal policy mix implies a