Question 1

The curve that indicates that a decrease in the price level will increase the level of aggregate demand is called

Accepted Answer

A)  the short-run aggregate supply curve. 
B)  the IS curve. 
C)  the aggregate demand curve. 
D)  the LM curve. 
A)  the short-run aggregate supply curve. 
B)  the IS curve. 
C)  the aggregate demand curve. 
D)  the LM curve.

Question 2

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 nominal interest rate would be

Accepted Answer

A)  7.6% 
B)  5%. 
C)  9.2%. 
D)  6.7%. 
A)  7.6% 
B)  5%. 
C)  9.2%. 
D)  6.7%.

Question 3

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

Accepted Answer

A)  the IS curve will shift to the right and the equilibrium levels of the real interest rate and real GDP will increase. 
B)  the IS curve will shift to the left and the equilibrium levels of the real interest rate and real GDP will decrease. 
C)  the LM curve will shift to the left and the equilibrium level of the real interest rate will increase and theequilibrium level of real GDP will decrease. 
D)  the LM curve will shift to the right and the equilibrium level of the real interest rate will decrease and the equilibrium level of real GDP will increase. 
A)  the IS curve will shift to the right and the equilibrium levels of the real interest rate and real GDP will increase. 
B)  the IS curve will shift to the left and the equilibrium levels of the real interest rate and real GDP will decrease. 
C)  the LM curve will shift to the left and the equilibrium level of the real interest rate will increase and theequilibrium level of real GDP will decrease. 
D)  the LM curve will shift to the right and the equilibrium level of the real interest rate will decrease and the equilibrium level of real GDP will increase.

Question 4

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 central bank increases the nominal money supply so that the new LM curve is Y=$3000 + $1000 x (r +   ). The new equilibrium level of the nominal interest rate would be

Accepted Answer

A)  7.6%. 
B)  5.4%. 
C)  3.7%. 
D)  6%. 
A)  7.6%. 
B)  5.4%. 
C)  3.7%. 
D)  6%.

The curve that indicates that a decrease in the price level will increase the level of aggregate demand is called

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

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

Exam 11: The Money Market and the LM Curve

The curve that indicates that a decrease in the price level will increase the level of aggregate demand is called

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

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters