macro95ex9

# macro95ex9 - Chapter 9 The IS-LM/AD-AS Model A General...

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Chapter 9 The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis T Multiple Choice Questions 1. The FE line shows the level of output at which the _____ market is in equilibrium. (a) Goods (b) Asset (c) Labor (d) Money Answer: C Level of difficulty: 1 Section: 9.1 2. The FE line is vertical because the level of output at full employment doesn’t depend on the (a) real wage rate. (b) level of employment. (c) marginal product of labor. (d) real interest rate. Answer: D Level of difficulty: 1 Section: 9.1 3. Which of the following would shift the FE line to the right? 4. Which of the following would shift the FE line to the left?

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Chapter 9 The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis 133 5. The IS curve shows the combinations of output and the real interest rate for which 6. An increase in the money supply would cause the FE line to (a) shift to the right. (b) shift to the left. (c) remain unchanged. (d) remain unchanged if Ricardian equivalence holds; otherwise, shift to the right. Answer: C Level of difficulty: 1 Section: 9.1 7. An adverse supply shock would cause the FE line to 8. Any change that reduces desired saving relative to desired investment (for a given level of output) causes the real interest rate to _____ and shifts the IS curve _____. 9. A decline in expected future output would cause the IS curve to
134 Abel/Bernanke • Macroeconomics, Fifth Edition

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