Question 1

In the money sector, other things being the same, an increase in the supply of money will cause

Accepted Answer

A) a decrease in the demand for bonds 
B) a decrease in interest rates 
C) a decrease in bond prices 
D) a decrease in stock values 
E) both C and D 
A) a decrease in the demand for bonds 
B) a decrease in interest rates 
C) a decrease in bond prices 
D) a decrease in stock values 
E) both C and D

Question 2

From which of the following equations can the equation for the IS-curve be derived?

Accepted Answer

A) I + G + NX = S + TA - TR 
B) Y = C + I + G + NX 
C) M/P = kY - hi 
D) MV = PY 
E) both A and B 
A) I + G + NX = S + TA - TR 
B) Y = C + I + G + NX 
C) M/P = kY - hi 
D) MV = PY 
E) both A and B

Question 3

A decrease in the income tax rate will

Accepted Answer

A) decrease the fiscal policy multiplier 
B) increase the slope of the IS-curve 
C) decrease the monetary policy multiplier 
D) decrease the slope of the AD-curve 
E) both A and B 
A) decrease the fiscal policy multiplier 
B) increase the slope of the IS-curve 
C) decrease the monetary policy multiplier 
D) decrease the slope of the AD-curve 
E) both A and B

Question 4

If money demand becomes more sensitive to changes in income, then

Accepted Answer

A) the LM-curve will become flatter 
B) the LM-curve will become steeper 
C) the AD-curve will become flatter 
D) fiscal policy will be more effective 
E) both B and C 
A) the LM-curve will become flatter 
B) the LM-curve will become steeper 
C) the AD-curve will become flatter 
D) fiscal policy will be more effective 
E) both B and C

Question 5

An increase in the interest sensitivity of money demand will

Accepted Answer

A) increase the size of the monetary policy multiplier 
B) decrease the size of the monetary policy multiplier 
C) make fiscal policy less effective 
D) make the LM-curve steeper 
E) both A and D 
A) increase the size of the monetary policy multiplier 
B) decrease the size of the monetary policy multiplier 
C) make fiscal policy less effective 
D) make the LM-curve steeper 
E) both A and D

Question 6

The movement along the AD-curve from left to right is equivalent to a shift of

Accepted Answer

A) the LM-curve to the right due to an increase in real money balances 
B) the IS-curve to the right due to a decrease in interest rates 
C) the LM-curve to the right due to an increase in nominal money supply 
D) the IS-curve to the right due to a lower price level 
E) both the IS- and LM-curves to the right due to more spending and higher money balances 
A) the LM-curve to the right due to an increase in real money balances 
B) the IS-curve to the right due to a decrease in interest rates 
C) the LM-curve to the right due to an increase in nominal money supply 
D) the IS-curve to the right due to a lower price level 
E) both the IS- and LM-curves to the right due to more spending and higher money balances

Question 7

If investment becomes more responsive to changes in the interest rate, then

Accepted Answer

A) the size of the government spending multiplier will increase 
B) a given increase in the interest rate will lead to a larger increase in income 
C) the IS-curve will become flatter 
D) the IS-curve will become steeper 
E) both A and C 
A) the size of the government spending multiplier will increase 
B) a given increase in the interest rate will lead to a larger increase in income 
C) the IS-curve will become flatter 
D) the IS-curve will become steeper 
E) both A and C

Question 8

An increase in the fiscal policy multiplier can be caused by

Accepted Answer

A) an increase in the interest sensitivity of investment 
B) an increase in the interest sensitivity of money demand 
C) a decrease in the interest sensitivity of money demand 
D) an increase in the income tax rate 
E) a decrease in autonomous saving 
A) an increase in the interest sensitivity of investment 
B) an increase in the interest sensitivity of money demand 
C) a decrease in the interest sensitivity of money demand 
D) an increase in the income tax rate 
E) a decrease in autonomous saving

Question 9

In an IS-LM framework, a decrease in money supply will lead to

Accepted Answer

A) an increase in aggregate money demand 
B) an increase in both income and the interest rate 
C) an increase in the interest rate and a decrease in income 
D) a decrease in the size of the monetary policy multiplier 
E) both A and C 
A) an increase in aggregate money demand 
B) an increase in both income and the interest rate 
C) an increase in the interest rate and a decrease in income 
D) a decrease in the size of the monetary policy multiplier 
E) both A and C

Question 10

If money demand becomes more income elastic, then the LM-curve will

Accepted Answer

A) shift parallel to the right 
B) shift parallel to the left 
C) become steeper 
D) become flatter 
E) become flatter and shift to the right 
A) shift parallel to the right 
B) shift parallel to the left 
C) become steeper 
D) become flatter 
E) become flatter and shift to the right

In the money sector, other things being the same, an increase in the supply of money will cause

From which of the following equations can the equation for the IS-curve be derived?

A decrease in the income tax rate will

If money demand becomes more sensitive to changes in income, then

An increase in the interest sensitivity of money demand will

The movement along the AD-curve from left to right is equivalent to a shift of

If investment becomes more responsive to changes in the interest rate, then

An increase in the fiscal policy multiplier can be caused by

In an IS-LM framework, a decrease in money supply will lead to

If money demand becomes more income elastic, then the LM-curve will

Introduction

National income accounting

Growth and accumulation

Growth and policy

Aggregate supply and demand

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Recession and depression

Inflation and hyperinflation

International adjustment and interdependence

Advanced topics

Filters

Exam 11: Money, interest, and income

In the money sector, other things being the same, an increase in the supply of money will cause

From which of the following equations can the equation for the IS-curve be derived?

A decrease in the income tax rate will

If money demand becomes more sensitive to changes in income, then

An increase in the interest sensitivity of money demand will

The movement along the AD-curve from left to right is equivalent to a shift of

If investment becomes more responsive to changes in the interest rate, then

An increase in the fiscal policy multiplier can be caused by

In an IS-LM framework, a decrease in money supply will lead to

If money demand becomes more income elastic, then the LM-curve will

Introduction

National income accounting

Growth and accumulation

Growth and policy

Aggregate supply and demand

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Recession and depression

Inflation and hyperinflation

International adjustment and interdependence

Advanced topics

Filters