NET- Assignment_5

The IS curve will shift to the right when which of the following occurs?

• an increase in the money supply

• an increase in government spending

• a reduction in the interest rate

• all of the above

Which of the following occurs as the economy moves leftward along a given IS

curve?

• An increase in the interest rate causes investment spending to decrease.

• An increase in the interest rate causes money demand to increase.

• An increase in the interest rate causes a reduction in the money supply.

• A reduction in government spending causes a reduction in demand for goods.

Suppose investment spending is not very sensitive to the interest rate. Given this

information, we know that

• the IS curve should be relatively flat.

• the IS curve should be relatively steep.

• the LM curve should be relatively flat.

• the LM curve should be relatively steep

For each interest rate, the LM curve illustrates the level of output where

• the goods market is in equilibrium.

• inventory investment equals zero.

• money supply equals money demand.

• none of the above

Suppose the economy is currently operating on both the LM curve and the IS curve.

Which of the following is true for this economy?

• Production equals demand.

• The money supply equals money demand

• The quantity supplied of bonds equals the quantity demanded of bonds.

• All of the above

Which of the following is incorrect regarding the IS curve?

• IS stands for Investment and Saving

• IS curve shows inverse relationship between interest rate and output

• The IS curve represents the money market

• The steepness of the IS curve depends on the interest elasticity of investment

With reference to the IS-LM model, an increase in money supply should cause:

• IS curve to shift left

• IS vurve to shift right

• LM curve to shift upwards

• LM curve to shift downwards

In the IS-LM model, a typical LM curve is:

• Downward sloping

• Upward sloping

• Horizontal

• Vertical

A change in which of the following will not shift the IS curve?

• Autonomous Investment

• Autonomous Money Demand

• Autonomous Consumption

• Autonomous Net Exports

Which of the equation is correct?

• Md= kP-hi

• Md= kY+hi

• Md= kY-M

• Md= kY-hi