# TestBanks Chapter 12 Aggregate Demand II Applying the IS-LM Model.docx

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1 Pool Canvas folder (12)/CourseComp... COURSES > BA121 > CONTROL PANEL > POOL MANAGER > POOL CANVAS Pool Canvas Add, modify, and remove questions. Select a question type from the Add Question drop-down list and click Go to add questions. Use Creation Settings to establish which default options, such as feedback and images, are available for question creation. Add Creation Settings Name TestBanks Chapter 12 Aggregate Demand II: Applying the IS-LM Model Description Instructions Multiple Choice 1 points Question The interaction of the IS curve and the LM curve together determine: Answer the price level and the inflation rate. the interest rate and the price level. investment and the money supply. the interest rate and the level of output. Add Question Here (Exhibit: IS LM Fiscal Policy) Based on the graph, starting from equilibrium at interest rate r and income Y , a 1 1 decrease in government spending would generate the new equilibrium combination of interest rate and income: Answer r , Y 2 2 r , Y 3 2 r , Y 2 3 r , Y 3 3 Add Question Here Multiple Choice 1 points Question Exhibit: IS–LM Fiscal Policy of 38 12/8/2012 11:40 م Add Question Here Multiple Choice 1 points Question Exhibit: IS–LM Fiscal Policy Reference: Ref 12-1
2 Pool Canvas folder (12)/CourseComp... (Exhibit: IS LM Fiscal Policy) Based on the graph, starting from equilibrium at interest rate r and income Y , an 1 1 increase in governme nt spending would generate the new equilibriu m combinati on of interest rate and income: Answer r , Y 2 2 r , Y 3 2 r , Y 2 3 r , Y 3 3 (Exhibit: IS LM Fiscal Policy) Based on the graph, starting from equilibrium at interest rate r and income Y , a tax cut Answer of 38 12/8/2012 11:40 م Add Question Here Multiple Choice 1 points Question Exhibit: IS–LM Fiscal Policy Reference: Ref 12-1 Reference: Ref 12-1
2 Pool Canvas folder (12)/CourseComp... 1 1 would generate the new equilibriu m combinati on of interest rate and income: Answer r , Y 2 2 r , Y 3 2 r , Y 2 3 r , Y 3 3 Add Question Here Multiple Choice 1 points Question In the IS LM model when government spending rises, in short-run equilibrium, in the usual case the interest rate ______ and output ______. rises; falls rises; rises falls; rises falls; falls Add Question Here Multiple Choice 1 points Question In the IS LM model, a decrease in government purchases leads to a(n) ______ in planned expenditures, a(n) ______ in total income, a(n) ______ in money demand, and a(n) ______ in the equilibrium interest rate. Answer decrease; decrease; decrease; decrease increase; increase; increase; increase decrease; decrease; increase; increase increase; increase; decrease; decrease Add Question Here Multiple Choice 1 points Question In the IS LM model, the impact of an increase in government purchases in the goods market has ramifications in the money market, because the increase in income causes a(n) ______ in money ______.
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