the economics of money, banking, and financial markets

906 #

© 2014 Pearson Canada Inc.#

4. 
   

   In the long-run ISLM model and with everything else held constant, the long-run effect of an
   expansionary fiscal policy is to ____ real output and ____ the interest rate.
   A) increase; increase
   B) not change; not change
   C) increase; not change
   D) not change; increase
   Answer: D
   Diff: 2 Type: MC Page Ref: 17
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model

   
   


5. 
   

   In the long-run ISLM model and with everything else held constant, the long-run effect of a
   contractionary fiscal policy is to ____ real output and ____ the interest rate.
   A) not change; not change
   B) decrease; decrease
   C) decrease; not change
   D) not change; decrease
   Answer: D
   Diff: 2 Type: MC Page Ref: 17
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model

   
   


6. 
   

   In the long-run ISLM model and with everything else held constant, the long-run effect of a
   cut in government spending is to ____ real output and ____ the interest rate.
   A) increase; increase
   B) increase; not change
   C) not change; increase
   D) not change; decrease
   Answer: D
   Diff: 2 Type: MC Page Ref: 17
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model

   
   


7. 
   

   In the long-run ISLM model and with everything else held constant, the long-run effect of a
   tax cut is to ____ real output and ____ the interest rate.
   A) increase; increase
   B) increase; not change
   C) not change; increase
   D) not change; decrease
   Answer: C
   Diff: 2 Type: MC Page Ref: 17
   Skill: Recall
   Objective List: WEB CHAPTER: The ISLM Model