the economics of money, banking, and financial markets

893 #

© 2014 Pearson Canada Inc.#

3. 
   

   Everything else held constant, a monetary expansion is characterized by ____ output and
   ____ interest rates.
   A) rising; rising
   B) rising; falling
   C) falling; rising
   D) falling; falling
   Answer: B
   Diff: 2 Type: MC Page Ref: 7 - 8
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model

   
   


4. 
   

   A contractionary monetary policy shifts the LM curve to the ____, reducing ____,
   everything else held constant.
   A) left; output and increasing interest rates
   B) left; both real output and interest rates
   C) right; both interest rates and real output
   D) right; interest rates and increasing real output
   Answer: A
   Diff: 2 Type: MC Page Ref: 7 - 8
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model

   
   


5. 
   

   Everything else held constant, a monetary contraction is characterized by ____ output
   and ____ interest rates.
   A) rising; rising
   B) rising; falling
   C) falling; rising
   D) falling; falling
   Answer: C
   Diff: 2 Type: MC Page Ref: 7 - 8
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model

   
   


6. 
   

   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: 7 - 8
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model