the economics of money, banking, and financial markets

715 $

© 2014 Pearson Canada Inc.$

28. 
    

    A decline in the money supply shifts the MP curve to the left, causing the interest rate to
    ____ and output to ____, everything else held constant.
    A) rise; rise
    B) rise; fall
    C) fall; rise
    D) fall; fall
    Answer: B
    Diff: 2 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

    
    


29. 
    

    An increase in the money ____ shifts the MP curve to the ____, causing the
    interest rate to fall and output to rise, everything else held constant.
    A) demand; right
    B) demand; left
    C) supply; right
    D) supply; left
    Answer: C
    Diff: 2 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

    
    


30. 
    

    An increase in the money supply shifts the MP curve to the right, causing the interest rate to
    ____ and output to ____, everything else held constant.
    A) rise; rise
    B) rise; fall
    C) fall; rise
    D) fall; fall
    Answer: C
    Diff: 2 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

    
    


31. 
    

    When the central bank ____ the money supply, the MP curve shifts to the right, interest
    rates ____, and equilibrium aggregate output ____, everything else held constant.
    A) increases; fall; increases
    B) increases; rise; decreases
    C) decreases; rise; decreases
    D) decreases; fall; increases
    Answer: A
    Diff: 2 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