RAQ5 - 1 The FE line shows the level of output at which the...

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Sheet1 Page 1 1) The FE line shows the level of output at which the _____ market is in equilibrium. A) Labor B) Asset C) Goods D) Money ANSWER: A 2) The FE line is vertical because the level of output at full employment doesn't depend on the A) real interest rate. B) level of employment. C) marginal product of labor. D) real wage rate. ANSWER: A 5) The IS curve shows the combinations of output and the real interest rate for which A) the goods market is in equilibrium. B) the labor market is in equilibrium. C) an increase in output will cause the market-clearing interest rate to be bid up. D) the financial asset market is in equilibrium. ANSWER: A 14) An increase in the expected future marginal product of capital would cause the IS curve to A) shift down and to the left. B) remain unchanged. C) shift up and to the right. D) remain unchanged if firms face borrowing constraints ANSWER: C 19) A change that increases real money demand relative to the real money supply causes A) the LM curve to shift up and to the left.
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