899 #
© 2014 Pearson Canada Inc.#
The more interest-sensitive is money demand, the ____.
A) more effective is fiscal policy relative to monetary policy
B) more effective is monetary policy relative to fiscal policy
C) steeper is the IS curve
D) steeper is the LM curve
Answer: A
Diff: 2 Type: MC Page Ref: 12
Skill: Recall
Objective List: 28.3 Evaluate how fiscal and monetary policy variables are used in the IS-LM
model
If the economy is characterized by a certain and stable LM curve, then ____ target
produces ____ fluctuations in aggregate output.
A) an interest rate; smaller
B) a money supply; smaller
C) a money supply; larger
D) an exchange rate; larger
Answer: B
Diff: 2 Type: MC Page Ref: 14
Skill: Recall
Objective List: 28.3 Evaluate how fiscal and monetary policy variables are used in the IS-LM
model
If the economy is characterized by a stable IS curve and an unstable LM curve, then ____
target produces ____ fluctuations in aggregate output.
A) an interest rate; larger
B) a money supply; smaller
C) a money supply; larger
D) an exchange rate; smaller
Answer: C
Diff: 2 Type: MC Page Ref: 15
Skill: Recall
Objective List: 28.3 Evaluate how fiscal and monetary policy variables are used in the IS-LM
model
If the ____ curve is relatively more unstable than the ____ curve, a money supply
target is preferred.
A) IS; IS
B) IS; LM
C) LM; IS
D) LM; LM
Answer: B
Diff: 2 Type: MC Page Ref: 14
Skill: Recall
Objective List: 28.3 Evaluate how fiscal and monetary policy variables are used in the IS-LM
model