the economics of money, banking, and financial markets

730 $

© 2014 Pearson Canada Inc.$

40. 
    

    A reduction in government spending causes the equilibrium level of aggregate output to
    ____ at any given interest rate and shifts the ____ curve to the ____, everything
    else held constant.
    A) rise; MP; right
    B) fall; IS; left
    C) fall; MP; left
    D) rise; IS; right
    Answer: B
    Diff: 2 Type: MC Page Ref: 564
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


41. 
    

    A decline in taxes ____ consumer expenditure and shifts the ____ curve to the
    ____, everything else held constant.
    A) raises; MP; right
    B) lowers; IS; left
    C) raises; IS; right
    D) lowers; MP; left
    Answer: C
    Diff: 2 Type: MC Page Ref: 564
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


42. 
    

    If Canadian college students decide that drinking Mexican-brewed beer helps one get
    noticed, net exports will tend to fall, causing aggregate demand to ____ and the ____
    curve to shift to the left, everything else held constant.
    A) fall; MP
    B) fall; IS
    C) rise; MP
    D) rise; IS
    Answer: B
    Diff: 2 Type: MC Page Ref: 564
    Skill: Applied
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate