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In the money market, a condition of excess demand for money can be eliminated by a
____ in aggregate output or a ____ in the interest rate, 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: 23.2 Explain how the IS - MP model can be used to address questions about the
effectiveness of monetary and fiscal policy
In the money market, a condition of excess supply of money can be eliminated by a
____ in aggregate output or a ____ in the interest rate, 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: 23.2 Explain how the IS - MP model can be used to address questions about the
effectiveness of monetary and fiscal policy
In the IS-MP framework, an expansionary fiscal policy resulting from government
purchases, causes aggregate output to ____ and the interest rate to ____, everything
else held constant.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase
Answer: A
Diff: 2 Type: MC Page Ref: 564
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