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

Complete "crowding-out" describes the situation in the economy when

Along a downward-sloping money demand schedule,as the interest rate falls

A lower nominal money supply is equally demanded,given each interest rate,at a ________ level of income,meaning that the LM curve has shifted to the ________.

In constructing the planned autonomous demand schedule,which two components are assumed to depend on the interest rate?

In deriving an LM curve,higher incomes shift the money demand schedule to the ________,yet the unchanged real money supply continues to be equally demanded so long as the interest rate ________.

If the marginal leakage rate is 0.2,then a $300 fall in autonomous planned expenditures will shift the IS curve leftward by the amount of

During the recession phase of the business cycle,business firms become pessimistic about their future earning capacity as do banks.Nominal interest rates fall during recessions.Investment lending could be expected to

Figure 4-5 -In Figure 4-5 above,at what point do we find the commodity market in equilibrium while the money market is not?

A steep IS curve implies that

Factors that shift the demand schedule for money include all of the following EXCEPT

If the demand for money was totally independent of the interest rate,the LM curve would ________ and monetary policy would ________.

If a 200 billion dollar increase in government spending occurs when the Fed seeks to maintain a fixed interest rate then

During Global Financial Crises,housing starts in the US fell by

If the Fed's goal is to keep the interest rate fixed,a contractionary fiscal policy must be accompanied by ________ monetary policy that shifts the LM curve to the ________.

Monetary policy showed to be impotent in which of the following historical episodes.

Monetary policy will have a large income effect provided the

The September 11 attacks had the effect of shifting the

Figure 4-2 -Employing Figure 4-2 above,the money market is initially in equilibrium at point G and after the economy moves to equilibrium,the Federal Reserve increases the money supply by 500.We would observe

Suppose that Y = 4,000 and we are at a point on the money demand schedule where (M/P)= 600.Should Y fall to 3,900,the same quantity of real money balances

Suppose that we are at a point on the money demand schedule where (M/P)= 500.At a constant interest rate,the quantity of money demanded increases when real income ________ so that ________.