Exam 21: Monetary and Fiscal Policy in the ISLM Model

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

In the Keynesian cross diagram,a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift down,the equilibrium level of aggregate output to ________,and the IS curve to shift to the ________,everything else held constant.

As bonds become a riskier asset,the demand for money ________ and,all else constant,the equilibrium interest rate ________.

If the price level decreases,everything else held constant,the ________ curve shifts to the ________.

A decrease in autonomous planned investment spending,other things equal,shifts the ________ curve to the ________.

The long-run neutrality of money refers to the fact that in the long run,monetary policy ________.

A shift in tastes toward foreign goods ________ net exports in the U.S.and causes the IS curve to shift to the ________ in the U.S.,everything else held constant.

Everything else held constant,an increase in autonomous consumer spending will cause the IS curve to shift to the ________ and aggregate demand will ________.

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

The LM curve will be vertical and fiscal policy ineffective when ________.

In the long-run ISLM model and with everything else held constant,the long-run effect of an expansionary fiscal policy is to ________ real output and ________ the interest rate.

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

A shift in tastes toward foreign goods ________ net exports in the U.S.and causes the quantity of aggregate output demanded to ________ in the U.S.,everything else held constant.

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 ________.

An appreciation of the U.S.dollar makes foreign goods cheaper relative to American goods,resulting in a ________ in net exports in the U.S.and a ________ shift of the IS curve in the U.S.,everything else held constant.

If young business professionals in America suddenly decide that driving German-made cars is an important status symbol,net exports will tend to ________ causing aggregate demand to ________,everything else held constant.

A decline in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________,everything else held constant.

Everything else held constant,an increase in net taxes will cause the IS curve to shift to the ________ and aggregate demand will ________.

An autonomous appreciation of the U.S.dollar makes American goods ________ expensive relative to foreign goods which ________ net exports in the U.S.

In deriving the aggregate demand curve a ________ in the price level leads to ________ in the real money supply because the nominal quantity of dollars can purchase ________ goods and services.