Exam 11: The Money Market and the LM Curve

An increase in the foreign real interest rate will

A decrease in the price level will

Each of the following is an international shock that will affect the IS-LM equilibrium except

If the nominal money supply increases,

Any change in the nominal money supply or the price level will

If the level of government purchases decreases,

If the nominal money supply decreases,

The questions with which Chapter 11 is concerned include each of the following except

A decrease in the foreign real interest rate will

The demand for money is __________ related to total income and _________ related to __________.

A decrease in foreign real GDP will

The opportunity cost of holding wealth in the form of money is

If the price level decreases so that the real money supply increases,

Assume that the economy's marginal propensity to expend is 0.6, the initial baseline level of autonomous spending is $4000 billion, a one percentage point increase in the real interest rate will reduce the sum of investment and gross exports by $100 billion the inflation rate is 2%, and the LM curve is Y=$1500 + $1000 x (r + ) -Suppose that the baseline investment level increases by $200 billion. The new equilibrium level of the real interest rate would be

If the expected inflation rate increases,

Each of the following is a reason why a high level of real GDP should be associated with higher inflation and a higher price level except

If the nominal money supply decreases,

If the term premium increases,

If the expected rate of inflation decreases, the risk premium increases, or the term premium increases,

If there is excess demand in the money market,