the economics of money, banking, and financial markets

900 #

© 2014 Pearson Canada Inc.#

11. 
    

    If the ____ curve is relatively more unstable than the ____ curve, an interest rate
    target is preferred.
    A) IS; IS
    B) IS; LM
    C) LM; IS
    D) LM; LM
    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

    
    


12. 
    

    If the Fed adopts a policy of pegging the interest rate, a ____ in government spending
    forces the Fed to increase the money supply to prevent interest rates from ____.
    A) fall; increasing
    B) fall; decreasing
    C) rise; decreasing
    D) rise; increasing
    Answer: D
    Diff: 3 Type: MC Page Ref: 17
    Skill: Applied
    Objective List: 28.3 Evaluate how fiscal and monetary policy variables are used in the IS-LM
    model