the economics of money, banking, and financial markets

903 #

© 2014 Pearson Canada Inc.#

17. 
    

    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: WEB CHAPTER: The ISLM Model

    
    


18. 
    

    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: WEB CHAPTER: The ISLM Model

    
    


19. 
    

    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: WEB CHAPTER: The ISLM Model

    
    


20. 
    

    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: 15
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model