the economics of money, banking, and financial markets

908 #

© 2014 Pearson Canada Inc.#

12. 
    

    As long as the level of output ____ the natural rate level, the price level will continue to
    ____, shifting the LM curve to the ____, until finally output is back at the natural rate
    level.
    A) exceeds; rise; right
    B) exceeds; rise; left
    C) remains below; fall; left
    D) remains below; rise; right
    Answer: B
    Diff: 2 Type: MC Page Ref: 16
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model

    
    


13. 
    

    In the long-run ISLM model and with everything else held constant, as long as the level of
    output ____ the natural rate level, the price level will continue to ____, shifting the LM
    curve to the ____, until finally output is back at the natural rate level.
    A) exceeds; rise; right
    B) exceeds; fall; left
    C) remains below; fall; right
    D) remains below; rise; left
    Answer: C
    Diff: 2 Type: MC Page Ref: 16
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model