Filters
Question type
Study Flashcards

A change that increases the real money supply relative to real money demand causes


A) the LM curve to shift down.
B) the LM curve to shift up.
C) the IS curve to shift down.
D) the IS curve to shift up.

Correct Answer

verifed

verified

What adjusts to restore general equilibrium after a shock to the economy?


A) the LM curve
B) the IS curve
C) the FE line
D) the labour supply curve

Correct Answer

verifed

verified

Banks decide to raise the interest rate they pay on chequing accounts from 4.75% to 5.25%.This action would


A) increase money demand,shifting the LM curve up.
B) increase money demand,shifting the LM curve down.
C) decrease money demand,shifting the LM curve up.
D) decrease money demand,shifting the LM curve down.

Correct Answer

verifed

verified

A financial innovation,such as money market mutual funds,which increases the liquidity of alternatives to money,would


A) increase money demand,shifting the LM curve up.
B) increase money demand,shifting the LM curve down.
C) decrease money demand,shifting the LM curve up.
D) decrease money demand,shifting the LM curve down.

Correct Answer

verifed

verified

The aggregate demand curve


A) is vertical.
B) slopes upward.
C) is horizontal.
D) slopes downward.

Correct Answer

verifed

verified

The IS curve shows the combinations of output and the real interest rate for which


A) the goods market is in equilibrium.
B) the labour market is in equilibrium.
C) the financial asset market is in equilibrium.
D) an increase in output will cause the market-clearing interest rate to be bid up.

Correct Answer

verifed

verified

A

A fall in the price of a bond causes the yield of the bond to


A) rise.
B) fall.
C) remain unchanged.
D) rise if it's a short-term bond and fall if it's a long-term bond.

Correct Answer

verifed

verified

An increase in labour supply


A) shifts FE to the right.
B) shifts IS to the right.
C) shifts LM to the right.
D) increases capital.

Correct Answer

verifed

verified

Classical economists believe that in the short run,


A) money neutrality exists and prices adjust rapidly.
B) money neutrality does not exist and prices adjust rapidly.
C) money neutrality exists and prices do not adjust rapidly.
D) money neutrality does not exist and prices do not adjust rapidly.

Correct Answer

verifed

verified

A

Suppose the Bank of Canada's short-run response to any change in the economy is to change the money supply to maintain the existing real interest rate.What would happen to money supply if there were a reduction in government purchases? Given the Bank of Canada's policy,what would happen in the very short run (before general equilibrium is restored)to output and the real interest rate? What must happen to the LM curve and the price level to restore general equilibrium?

Correct Answer

verifed

verified

The decrease in G shifts the IS curve do...

View Answer

The full-employment (FE) line shifts right if


A) unemployment declines.
B) technology advances.
C) net exports increase.
D) GDP rises.

Correct Answer

verifed

verified

A rise in the price of a bond causes the yield of the bond to


A) rise.
B) fall.
C) remain unchanged.
D) rise if it's a short-term bond and fall if it's a long-term bond.

Correct Answer

verifed

verified

An expansionary fiscal policy will lead to


A) an increase in output and an increase in the interest rate.
B) an increase in output and a decrease in the interest rate.
C) a decrease in output and an increase in the interest rate.
D) a decrease in output and a decrease in the interest rate.

Correct Answer

verifed

verified

In an oil-importing country,a permanent fall in oil prices


A) shifts IS to the right.
B) shifts LM to the left.
C) shifts FE to the left.
D) shifts IS to the left.

Correct Answer

verifed

verified

People have increased their expectations of inflation from 3% to 5%,directly causing


A) a relative increase in real money demand,shifting the LM curve up.
B) a relative decrease in real money demand,shifting the LM curve down.
C) a relative increase in real money demand,shifting the LM curve down.
D) a relative decrease in real money demand,shifting the LM curve up.

Correct Answer

verifed

verified

B

Classical economists think general equilibrium is attained relatively quickly because


A) the real interest rate adjusts quickly.
B) the level of output adjusts quickly.
C) the real wage rate adjusts quickly.
D) the price level adjusts quickly.

Correct Answer

verifed

verified

An increase in money supply causes the real interest rate to ________ and output to ________ in the short run,before prices adjust to restore equilibrium.


A) rise;rise
B) rise;fall
C) fall;rise
D) fall;fall

Correct Answer

verifed

verified

A rise in expected future output that doesn't affect labour supply would shift the IS curve ________ and the FE line ________.


A) down;is unchanged
B) down;right
C) up;is unchanged
D) up;right

Correct Answer

verifed

verified

Which one of the following shifts the IS curve?


A) an increase in the money supply
B) an increase in the real interest rate
C) an expansionary monetary policy
D) a temporary increase in government purchases

Correct Answer

verifed

verified

The IS-LM model predicts that a temporary adverse supply shock


A) reduces output,national saving,and investment,but not the real interest rate.
B) reduces output,national saving,and the real interest rate,but not investment.
C) reduces the real interest rate,investment,and output,but not national saving.
D) reduces output,national saving,investment,and the real interest rate.

Correct Answer

verifed

verified

Showing 1 - 20 of 101

Related Exams

Exam 1

Introduction to Macroeconomics

61 Questions

Exam 2

The Measurement and Structure of the Canadian Economy

99 Questions

Exam 3

Productivity, output, and Employment

111 Questions

Exam 4

Consumption, saving, and Investment

95 Questions

Exam 5

Saving and Investment in the Open Economy

94 Questions

Exam 6

Long-Run Economic Growth

99 Questions

Exam 7

The Asset Market, money, and Prices

95 Questions

Exam 8

Business Cycles

58 Questions

Exam 10

Exchange Rates, business Cycles, and Macroeconomic Policy

110 Questions

Exam 11

Classical Business Cycle Analysis: Market-Clearing Macroeconomics

99 Questions

Exam 12

Keynesian Business Cycle Analysis: Non Market Clearing Macroeconomics

91 Questions

Exam 13

Unemployment and Inflation

101 Questions

Exam 14

Monetary Policy and the Bank of Canada

90 Questions

Exam 15

Government Spending and Its Financing

90 Questions

Show Answer