Exam 24: The ISLM World

Along an LM curve at higher interest rates there is __________ money demanded, so income must be higher to __________ the demand for transactions balances if the total demand for money is to equal the fixed supply.

A rising GDP causes __________ the money demand curve.

Which of the following is an equilibrium condition in the ISLM model?

Starting from equilibrium in the ISLM framework, an increase in money demand results in

In the ISLM framework, monetary policy has the greatest impact on equilibrium income

The slope of the IS curve will be steeper the __________ is the sensitivity of investment to a unit change in the interest rate and the __________ is marginal propensity to save.

Any decrease in autonomous spending will

A falling GDP causes __________ the money demand curve.

The IS curve shows a series of equilibrium points in the goods market for various levels of

With a rise in government expenditure we

The steeper the LM curve

Assume that you are a policy adviser who believes that money demand is highly interest-sensitive but investment is not. Asked your advice on how to pull the economy out of a recession, you are likely to emphasize

Which of the following is an equilibrium condition for the goods market?

Which of the following is an equilibrium condition for the goods market?

Which of the following will cause the LM curve to shift to the left?

Assume that the Cambridge k = .20. If income is equal to $100,000, the transactions demand for money is equal to

In the ISLM framework, monetary policy has the greatest impact on equilibrium income

Liquidity preference theory indicates that at lower interest rates

In the complete algebraic formulation of ISLM,

Along an IS curve as income levels __________, saving is larger, so the interest rate must be __________ to expand the level of investment so it will be equal to saving.