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Economics of Money, Banking & Financial Markets, 5e (Mishkin)
Chapter 28 WEB CHAPTER: The ISLM Model
28.1 Keynes's Fixed Price Level Assumption and the IS Curve
The key assumption in the ISLM model is that ____.
A) the price level is fixed
B) the inflation rate is zero
C) there is no role for interest rates
D) Both A and B.
Answer: D
Diff: 1 Type: MC Page Ref: 1
Skill: Recall
Objective List: WEB CHAPTER: The ISLM Model
The money market is in equilibrium ____.
A) at any point on the IS curve
B) at any point on the LM curve
C) at only one point on the LM curve
D) only at the intersection of the IS and LM curves
Answer: B
Diff: 2 Type: MC Page Ref: 2
Skill: Recall
Objective List: WEB CHAPTER: The ISLM Model
The ____ describes the combinations of interest rates and aggregate output for which the
quantity of money demanded equals the quantity of money supplied.
A) IS curve
B) LM curve
C) consumption function
D) investment schedule
Answer: B
Diff: 2 Type: MC Page Ref: 2
Skill: Recall
Objective List: WEB CHAPTER: The ISLM Model
In the Keynesian model the quantity of money demanded is ____ related to income and
____ related to the interest rate.
A) positively; positively
B) positively; negatively
C) negatively; negatively
D) negatively; positively
Answer: B
Diff: 2 Type: MC Page Ref: 2
Skill: Recall
Objective List: WEB CHAPTER: The ISLM Model