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Unformatted text preview: of bonds will tend increase.
b. the price of bonds will tend to fall.
c. production equals demand.
d. the goods market is also in equilibrium.
e. the supply of bonds also equals the demand for bonds. ( ) 3. The LM curve shifts down (or, equivalently, to the right) when which of the following occurs?
a. an increase in taxes.
b. an increase in output.
c. an open market sale of bonds by the central bank.
d. an increase in consumer confidence.
e. none of the above. ( ) 4. Suppose policy makers decide to reduce taxes. This fiscal policy action will cause which of the
following to occur?
a. the LM curve shifts and the economy moves along the IS curve.
b. the IS curve shifts and the economy moves along the LM curve.
c. both the IS and LM curves shift.
d. neither the IS nor the LM curve shifts.
e. output wil...
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- Fall '13