the economics of money, banking, and financial markets

735 $

© 2014 Pearson Canada Inc.$

57. 
    

    Everything else held constant, an appreciation of the domestic currency will cause the IS
    curve to shift to the ____ and aggregate demand will ____.
    A) right; increase
    B) right; decrease
    C) left; increase
    D) left; decrease
    Answer: D
    Diff: 2 Type: MC Page Ref: 565 - 566
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


58. 
    

    Everything else held constant, a depreciation of the domestic currency will cause the IS
    curve to shift to the ____ and aggregate demand will ____.
    A) right; increase
    B) right; decrease
    C) left; increase
    D) left; decrease
    Answer: A
    Diff: 2 Type: MC Page Ref: 565 - 566
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


59. 
    

    Everything else held constant, a decrease in government spending will cause the IS curve to
    shift to the ____ and aggregate demand will ____.
    A) right; increase
    B) right; decrease
    C) left; increase
    D) left; decrease
    Answer: D
    Diff: 2 Type: MC Page Ref: 565 - 566
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


60. 
    

    A liquidity trap occurs when ____.
    A) the central bank cannot lower policy rates below zero
    B) government spending crowds out private investment
    C) planned investment equals zero
    D) money is no longer considered a liquid asset
    Answer: A
    Diff: 2 Type: MC Page Ref: 567
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate