Exam 30: The ISLM Model

Despite an expansionary monetary policy,an economy experiences a recession.Everything else held constant,the recession could occur in spite of the rightward shift of the LM curve if

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 ________.

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

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

If the ________ curve is relatively more unstable than the ________ curve,an interest rate target is preferred.

If the Federal Reserve conducts open market sales,the money supply ________,shifting the LM curve to the ________,everything else held constant.

The less interest-sensitive is money demand,the

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

In the Keynesian model the quantity of money demanded is ________ related to income and ________ related to the interest rate.

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

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

If the quantity of money demanded is not affected by changes in the interest rate,the LM curve is ________ and fiscal policy will be ________.

In the ISLM framework a contractionary fiscal policy causes aggregate output to ________ and the interest rate to ________,everything else held constant.

An autonomous rise in ________ shifts the LM curve to the ________,everything else held constant.

If the Federal Reserve conducts open market ________,the money supply ________,shifting the LM curve to the right,everything else held constant.

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.

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

In the basic closed-economy ISLM model,the money demand is a function of

In the long-run ISLM model and with everything else held constant,as long as the level of output ________ the natural rate level,the price level will continue to ________,shifting the LM curve to the ________,until finally output is back at the natural rate level.

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