Question 1

The interaction of the IS curve and the LM curve together determine:

Accepted Answer

A)  the price level and the inflation rate. 
B)  the interest rate and the price level. 
C)  investment and the money supply. 
D)  the equilibrium level of the interest rate and output. 
A)  the price level and the inflation rate. 
B)  the interest rate and the price level. 
C)  investment and the money supply. 
D)  the equilibrium level of the interest rate and output.

Question 2

According to the macroeconometric model developed by Data Resources Incorporated, if taxes are increased by $100 billion, but the money supply is held constant, then GDP will fall by about:

Accepted Answer

A)  zero. 
B)  $25 billion. 
C)  $75 billion. 
D)  $100 billion. 
A)  zero. 
B)  $25 billion. 
C)  $75 billion. 
D)  $100 billion.

Question 3

When bond traders for the Federal Reserve seek to decrease interest rates, they ______ bonds, which shifts the ______ curve to the right.

Accepted Answer

A)  buy; IS 
B)  buy; LM 
C)  sell; IS 
D)  sell; LM 
A)  buy; IS 
B)  buy; LM 
C)  sell; IS 
D)  sell; LM

Question 4

Use the following to answer questions :
Exhibit: Short Run to Long Run  
-(Exhibit: Short Run to Long Run) Based on the graph, if the economy starts from a short-term equilibrium at D, then the long-run equilibrium will be at ____ with a _____ price level.

Accepted Answer

A)  B; higher 
B)  B; lower 
C)  C; higher 
D)  C; lower 
A)  B; higher 
B)  B; lower 
C)  C; higher 
D)  C; lower

Question 5

In the IS-LM model, the impact of an increase in government purchases in the goods market has ramifications in the money market, because the increase in income causes a(n) ______ in money ______.

Accepted Answer

A)  increase; supply 
B)  increase; demand 
C)  decrease; supply 
D)  decrease; demand 
A)  increase; supply 
B)  increase; demand 
C)  decrease; supply 
D)  decrease; demand

The interaction of the IS curve and the LM curve together determine:

According to the macroeconometric model developed by Data Resources Incorporated, if taxes are increased by $100 billion, but the money supply is held constant, then GDP will fall by about:

When bond traders for the Federal Reserve seek to decrease interest rates, they bonds, which shifts the curve to the right.

Use the following to answer questions : Exhibit: Short Run to Long Run -(Exhibit: Short Run to Long Run) Based on the graph, if the economy starts from a short-term equilibrium at D, then the long-run equilibrium will be at with a _ price level.

In the IS-LM model, the impact of an increase in government purchases in the goods market has ramifications in the money market, because the increase in income causes a(n) in money .

The Science of Macroeconomics

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labor Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Understanding Consumer Behavior

The Theory of Investment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

Filters

Exam 12: Aggregate Demand Ii: Applying the Is-Lm Model

The interaction of the IS curve and the LM curve together determine:

According to the macroeconometric model developed by Data Resources Incorporated, if taxes are increased by $100 billion, but the money supply is held constant, then GDP will fall by about:

When bond traders for the Federal Reserve seek to decrease interest rates, they ______ bonds, which shifts the ______ curve to the right.

Use the following to answer questions : Exhibit: Short Run to Long Run -(Exhibit: Short Run to Long Run) Based on the graph, if the economy starts from a short-term equilibrium at D, then the long-run equilibrium will be at ____ with a _____ price level.

In the IS-LM model, the impact of an increase in government purchases in the goods market has ramifications in the money market, because the increase in income causes a(n) ______ in money ______.

The Science of Macroeconomics

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labor Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Understanding Consumer Behavior

The Theory of Investment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

Filters

When bond traders for the Federal Reserve seek to decrease interest rates, they bonds, which shifts the curve to the right.

Use the following to answer questions : Exhibit: Short Run to Long Run -(Exhibit: Short Run to Long Run) Based on the graph, if the economy starts from a short-term equilibrium at D, then the long-run equilibrium will be at with a _ price level.

In the IS-LM model, the impact of an increase in government purchases in the goods market has ramifications in the money market, because the increase in income causes a(n) in money .