the economics of money, banking, and financial markets

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© 2014 Pearson Canada Inc.$

21. 
    

    An increase in the money supply, other things equal, shifts the ____ curve to the
    ____.
    A) IS; right
    B) IS; left
    C) MP; left
    D) MP; right
    Answer: D
    Diff: 1 Type: MC Page Ref: 561
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


22. 
    

    An expansionary monetary policy shifts the MP curve to the ____, reducing ____,
    everything else held constant.
    A) left; output and increasing interest rates
    B) left; both real output and interest rates
    C) right; both interest rates and real output
    D) right; interest rates and increasing real output
    Answer: D
    Diff: 2 Type: MC Page Ref: 561
    Skill: Recall
    Objective List: 23.2 Explain how the IS - MP model can be used to address questions about the
    effectiveness of monetary and fiscal policy

    
    


23. 
    

    If the Bank of Canada conducts open market purchases, the money supply ____,
    shifting the MP curve to the ____, everything else held constant.
    A) decreases; right
    B) decreases; left
    C) increases; right
    D) increases; left
    Answer: C
    Diff: 1 Type: MC Page Ref: 561
    Skill: Applied
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


24. 
    

    If the Bank of Canada conducts open market sales, the money supply ____, shifting the
    MP curve to the ____, everything else held constant.
    A) decreases; right
    B) decreases; left
    C) increases; right
    D) increases; left
    Answer: B
    Diff: 1 Type: MC Page Ref: 561
    Skill: Applied
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate