the economics of money, banking, and financial markets

723 $

© 2014 Pearson Canada Inc.$

18. 
    

    In the IS-MP framework a contractionary fiscal policy causes aggregate output to ____
    and the interest rate to ____, everything else held constant.
    A) increase; increase
    B) increase; decrease
    C) decrease; decrease
    D) decrease; increase
    Answer: C
    Diff: 2 Type: MC Page Ref: 564
    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

    
    


19. 
    

    Everything else held constant, an expansionary ____ policy will cause the interest rate
    to rise, while an expansionary ____ policy will cause the interest rate to fall.
    A) monetary; monetary
    B) monetary; fiscal
    C) fiscal; monetary
    D) fiscal; fiscal
    Answer: C
    Diff: 2 Type: MC Page Ref: 564
    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

    
    


20. 
    

    Aggregate output and the interest rate are ____ related to government spending and are
    ____ related to taxes.
    A) positively; positively
    B) positively; negatively
    C) negatively; positively
    D) negatively; negatively
    Answer: B
    Diff: 2 Type: MC Page Ref: 564
    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

    
    


21. 
    

    An increase in spending that results from expansionary ____ policy causes the interest
    rate to ____, everything else held constant.
    A) fiscal; rise
    B) fiscal; fall
    C) incomes; rise
    D) incomes; fall
    Answer: A
    Diff: 2 Type: MC Page Ref: 564
    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