the economics of money, banking, and financial markets

884 #

© 2014 Pearson Canada Inc.#

3. 
   

   If the economy is on the LM curve, but is to the right of the IS curve, aggregate output will
   ____ and the interest rate will ____.
   A) rise; rise
   B) rise; fall
   C) fall; rise
   D) fall; fall
   Answer: D
   Diff: 2 Type: MC Page Ref: 4
   Skill: Applied
   Objective List: 28.2 Use IS-LM to determine aggregate output

   
   


4. 
   

   If the economy is on the LM curve, but is to the left of the IS curve, aggregate output will
   ____ and the interest rate will ____.
   A) rise; rise
   B) rise; fall
   C) fall; rise
   D) fall; fall
   Answer: A
   Diff: 2 Type: MC Page Ref: 4
   Skill: Recall
   Objective List: 28.2 Use IS-LM to determine aggregate output

   
   


5. 
   

   If the economy is on the IS curve, but is to the left of the LM curve, aggregate output will
   ____ and the interest rate will ____.
   A) rise; rise
   B) rise; fall
   C) fall; rise
   D) fall; fall
   Answer: B
   Diff: 2 Type: MC Page Ref: 4
   Skill: Applied
   Objective List: 28.2 Use IS-LM to determine aggregate output

   
   


6. 
   

   If the economy is on the IS curve, but is to the right of the LM curve, aggregate output will
   ____ and the interest rate will ____.
   A) rise; rise
   B) rise; fall
   C) fall; rise
   D) fall; fall
   Answer: C
   Diff: 2 Type: MC Page Ref: 4
   Skill: Applied
   Objective List: 28.2 Use IS-LM to determine aggregate output