Homework 7 Monetary and Fiscal Policy

Homework 7 Monetary and Fiscal Policy - Name EID ECO 320L...

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Name:________________________________ EID:________________________________ ECO 320L Macroeconomic Theory Spring 2016 Professor Sinclair Homework No. 7: Monetary and Fiscal Policy (Chs. 14-15) Due at the Beginning of Class on Tuesday, April 26, 2016 Multiple Choice Questions 1. In the IS-LM graph, ________ and ____________ shift the same curve. In the AD-AS graph, it is ________ and ____________ that shift the same curves. (a) monetary policy, fiscal policy, price adjustment, fiscal policy. (b) monetary policy, price adjustment, monetary policy, fiscal policy. (c) fiscal policy, price adjustment, price adjustment, fiscal policy. (d) fiscal policy, price adjustment, price adjustment, monetary policy. (e) monetary policy, price adjustment, monetary policy, price adjustment. 2. Suppose the Fed is concerned about inflation so that they enact appropriate monetary policy to prevent a price increase. According to a Keynesian model, what effect(s) will this policy have on real money demand? (a) Real money demand will decrease. (b) The quantity of real money demanded will decrease. (c) Both (a) and (b). (d) Neither (a) nor (b).
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