Exam 10: Aggregate Demand I

In the Keynesian-cross model,as the interest rate increases,the equilibrium level of income ,whereas in the loanable funds model,as the level of income increases,the equilibrium level of the interest rate .

(Multiple Choice)

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Question 61

a.Graphically illustrate the impact of an open-market purchase by the Bank of Canada on the equilibrium interest rate using the theory of liquidity preference and the market for real money balances.Be sure to label: i.the axes ii.the curves iii.the initial equilibrium values iv.the direction the curve shifts v.the terminal equilibrium values.b.Explain in words what happens to equilibrium interest rate as a result of the open-market purchase.

(Essay)

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Question 62

Explain why a decrease in planned investment,which is a change in the goods market,will upset the equilibrium in the money market.

(Essay)

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Question 63

A given increase in taxes shifts the IS curve more to the left the:

(Multiple Choice)

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Question 64

The IS curve plots the relationship between the interest rate and that arises in the market for .

(Multiple Choice)

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Question 65

In the Keynesian-cross model with a given MPC,the government-expenditure multiplier ______ the tax multiplier.

(Multiple Choice)

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Question 66

According to the theory of liquidity preference,if the demand for real money balances exceeds the supply of real money balances,individuals will:

(Multiple Choice)

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Question 67

If money demand is extremely sensitive to the interest rate,then the curve is .

(Multiple Choice)

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Question 68

When planned expenditure is drawn on a graph as a function of income,the slope of the line is:

(Multiple Choice)

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Question 69

According to the theory of liquidity preference,a decrease in income will interest rates,and according to the quantity equation (assuming velocity is not constant),a decrease in interest rates will income.

(Multiple Choice)

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Question 70

The LM curve,in the usual case:

(Multiple Choice)

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Question 71

Assume that the money demand function is (M/P)^d = 2,200 - 200r,where r is the interest rate in percent.The money supply M is 2,000 and the price level P is 2.If the price level is fixed and the supply of money is raised to 2,800,then the equilibrium interest rate will:

(Multiple Choice)

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Question 72

If money demand does not depend on income,then the curve is .

(Multiple Choice)

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Question 73

During a recession,consumers may want to save more to provide themselves with a reserve to cushion possible job losses.Use the Keynesian model to describe the impact of an exogenous decrease in consumption (a decrease in C)on the equilibrium level of income in the economy.Will aggregate national saving increase?

(Essay)

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Question 74

An increase in the interest rate:

(Multiple Choice)

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Question 75

Use the following to answer questions : Exhibit: Keynesian Cross and Loanable Funds -(Exhibit: Keynesian Cross and Loanable Funds)Both graphs illustrate the inverse relationship between the equilibrium interest rate and the equilibrium level of income.The economy moves from equilibrium A to equilibrium B in the Loanable Funds diagram as a result of a(n)______ that shifts saving.

(Multiple Choice)

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Question 76

According to the theory of liquidity preference,tightening the money supply will nominal interest rates in the short run,and according to the Fisher effect,tightening the money supply will nominal interest rates in the long run.

(Multiple Choice)

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Question 77

When drawn on a graph with income along the horizontal axis and the interest rate along the vertical axis,the IS curve generally:

(Multiple Choice)

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Question 78

Both Keynesians and supply-siders believe a tax cut will lead to growth:

(Multiple Choice)

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Question 79

Planned expenditure is a function of:

(Multiple Choice)

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Question 80

Showing 61 - 80 of 142

In the Keynesian-cross model,as the interest rate increases,the equilibrium level of income ,whereas in the loanable funds model,as the level of income increases,the equilibrium level of the interest rate .

Explain why a decrease in planned investment,which is a change in the goods market,will upset the equilibrium in the money market.

A given increase in taxes shifts the IS curve more to the left the:

The IS curve plots the relationship between the interest rate and that arises in the market for .

In the Keynesian-cross model with a given MPC,the government-expenditure multiplier ______ the tax multiplier.

According to the theory of liquidity preference,if the demand for real money balances exceeds the supply of real money balances,individuals will:

If money demand is extremely sensitive to the interest rate,then the curve is .

When planned expenditure is drawn on a graph as a function of income,the slope of the line is:

According to the theory of liquidity preference,a decrease in income will interest rates,and according to the quantity equation (assuming velocity is not constant),a decrease in interest rates will income.

The LM curve,in the usual case:

Assume that the money demand function is (M/P)^d = 2,200 - 200r,where r is the interest rate in percent.The money supply M is 2,000 and the price level P is 2.If the price level is fixed and the supply of money is raised to 2,800,then the equilibrium interest rate will:

If money demand does not depend on income,then the curve is .

An increase in the interest rate:

According to the theory of liquidity preference,tightening the money supply will nominal interest rates in the short run,and according to the Fisher effect,tightening the money supply will nominal interest rates in the long run.

When drawn on a graph with income along the horizontal axis and the interest rate along the vertical axis,the IS curve generally:

Both Keynesians and supply-siders believe a tax cut will lead to growth:

Planned expenditure is a function of:

The Science of Macroeconomics

The Data of Macroeconomics

The Open Economy

Unemployment

Economic Growth I

Economic Growth II

Introduction to Economic Fluctuations

Aggregate Supply and the Short-Run

Stabilization Policy

Government Debt and Budget Deficits

Investment

Money Supply and Money Demand

The Financial System

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Exam 10: Aggregate Demand I

In the Keynesian-cross model,as the interest rate increases,the equilibrium level of income ______,whereas in the loanable funds model,as the level of income increases,the equilibrium level of the interest rate ______.

Explain why a decrease in planned investment,which is a change in the goods market,will upset the equilibrium in the money market.

A given increase in taxes shifts the IS curve more to the left the:

The IS curve plots the relationship between the interest rate and ______ that arises in the market for ______.

In the Keynesian-cross model with a given MPC,the government-expenditure multiplier ______ the tax multiplier.

According to the theory of liquidity preference,if the demand for real money balances exceeds the supply of real money balances,individuals will:

If money demand is extremely sensitive to the interest rate,then the ______ curve is ______.

When planned expenditure is drawn on a graph as a function of income,the slope of the line is:

According to the theory of liquidity preference,a decrease in income will ______ interest rates,and according to the quantity equation (assuming velocity is not constant),a decrease in interest rates will ______ income.

The LM curve,in the usual case:

Assume that the money demand function is (M/P)d = 2,200 - 200r,where r is the interest rate in percent.The money supply M is 2,000 and the price level P is 2.If the price level is fixed and the supply of money is raised to 2,800,then the equilibrium interest rate will:

If money demand does not depend on income,then the ______ curve is ______.

An increase in the interest rate:

According to the theory of liquidity preference,tightening the money supply will ______ nominal interest rates in the short run,and according to the Fisher effect,tightening the money supply will ______ nominal interest rates in the long run.

When drawn on a graph with income along the horizontal axis and the interest rate along the vertical axis,the IS curve generally:

Both Keynesians and supply-siders believe a tax cut will lead to growth:

Planned expenditure is a function of:

The Science of Macroeconomics

The Data of Macroeconomics

The Open Economy

Unemployment

Economic Growth I

Economic Growth II

Introduction to Economic Fluctuations

Aggregate Supply and the Short-Run

Stabilization Policy

Government Debt and Budget Deficits

Investment

Money Supply and Money Demand

The Financial System

Filters

In the Keynesian-cross model,as the interest rate increases,the equilibrium level of income ,whereas in the loanable funds model,as the level of income increases,the equilibrium level of the interest rate .

The IS curve plots the relationship between the interest rate and that arises in the market for .

If money demand is extremely sensitive to the interest rate,then the curve is .

According to the theory of liquidity preference,a decrease in income will interest rates,and according to the quantity equation (assuming velocity is not constant),a decrease in interest rates will income.

Assume that the money demand function is (M/P)^d = 2,200 - 200r,where r is the interest rate in percent.The money supply M is 2,000 and the price level P is 2.If the price level is fixed and the supply of money is raised to 2,800,then the equilibrium interest rate will:

If money demand does not depend on income,then the curve is .

According to the theory of liquidity preference,tightening the money supply will nominal interest rates in the short run,and according to the Fisher effect,tightening the money supply will nominal interest rates in the long run.