the economics of money, banking, and financial markets

691 #

© 2014 Pearson Canada Inc.#

5. 
   

   When interest rates fall in the United States (with the price level fixed), the value of the dollar
   ____, domestic goods become ____ expensive, and net exports ____.
   A) falls; less; fall
   B) falls; less; rise
   C) falls; more; fall
   D) rises; less; fall
   Answer: B
   Diff: 2 Type: MC Page Ref: 547 - 548
   Skill: Recall
   Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output

   
   


6. 
   

   An increase in interest rates ____.
   A) increases the value of the dollar, net exports, and equilibrium output
   B) increases the value of the dollar, reducing net exports and equilibrium output
   C) reduces the value of the dollar, net exports, and equilibrium output
   D) reduces the value of the dollar, increasing net exports and equilibrium output
   Answer: B
   Diff: 2 Type: MC Page Ref: 547 - 548
   Skill: Recall
   Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output

   
   


7. 
   

   A decrease in interest rates ____.
   A) increases the value of the dollar, net exports, and equilibrium output
   B) increases the value of the dollar, reducing net exports and equilibrium output
   C) reduces the value of the dollar, net exports, and equilibrium output
   D) reduces the value of the dollar, increasing net exports and equilibrium output
   Answer: D
   Diff: 2 Type: MC Page Ref: 547 - 548
   Skill: Recall
   Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output

   
   


8. 
   

   The negative relation between investment spending and the interest rate is what gives the
   ____ curve its ____ slope.
   A) IS; upward
   B) IS; downward
   C) LM; downward
   D) LM; upward
   Answer: B
   Diff: 2 Type: MC Page Ref: 547 - 548
   Skill: Recall
   Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output