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Everything else held constant, a monetary expansion is characterized by ____ output
and ____ interest rates.
A) rising; rising
B) rising; falling
C) falling; rising
D) falling; falling
Answer: B
Diff: 2 Type: MC Page Ref: 561
Skill: Recall
Objective List: 23.2 Explain how the IS - MP model can be used to address questions about the
effectiveness of monetary and fiscal policy
A contractionary monetary policy shifts the MP curve to the ____, reducing ____,
everything else held constant.
A) left; output and increasing interest rates
B) left; both real output and interest rates
C) right; both interest rates and real output
D) right; interest rates and increasing real output
Answer: A
Diff: 2 Type: MC Page Ref: 561
Skill: Recall
Objective List: 23.2 Explain how the IS - MP model can be used to address questions about the
effectiveness of monetary and fiscal policy
Everything else held constant, a monetary contraction is characterized by ____ output
and ____ interest rates.
A) rising; rising
B) rising; falling
C) falling; rising
D) falling; falling
Answer: C
Diff: 2 Type: MC Page Ref: 561
Skill: Recall
Objective List: 23.2 Explain how the IS - MP model can be used to address questions about the
effectiveness of monetary and fiscal policy