4 a no change in the interest rate b no change in

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A) no change in the interest rate B) no change in output C) a reduction in investment D) an increase in investment For this question, assume that investment spending depends only on output and no longer depends on the interest rate. Given this information, an increase in the money supply A) will cause investment to decrease. B) will cause investment to increase. C) will cause a reduction in the interest rate. D) will have no effect on output or the interest rate. E) will cause an increase in output and have no effect on the interest rate. A reduction in consumer confidence will likely have which of the following effects? A) a rightward shift in the IS curve B) a leftward shift in the IS curve C) an upward shift in the LM curve D) a downward shift in the LM curve An increase in the reserve deposit ratio, θ, will most likely have which of the following effects? A) a rightward shift in the IS curve B) a leftward shift in the IS curve C) an upward shift in the LM curve D) a downward shift in the LM curve A Fed purchase of securities will most likely have which of the following effects? A) a rightward shift in the IS curve B) a leftward shift in the IS curve C) an upward shift in the LM curve D) a downward shift in the LM curve A reduction in the aggregate price level, P, will most likely have which of the following effects? A) a rightward shift in the IS curve B) a leftward shift in the IS curve C) an upward shift in the LM curve D) a downward shift in the LM curve The IS curve will not shift when which of the following occurs? A) a reduction in government spending B) a reduction in the interest rate C) a reduction in consumer confidence D) all of the above E) none of the above Which of the following best defines the IS curve? A) the combinations of i and Y that maintain equilibrium in the goods market B) illustrates the effects of changes in i on investment C) illustrates the effects of changes in i on desired money holdings by individuals 5
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D) the combinations of i and Y that maintain equilibrium in financial markets Which of the following best defines the LM curve? A) the combinations of i and Y that maintain equilibrium in the goods market B) illustrates the effects of changes in i on investment C) illustrates the effects of changes in i on desired money holdings by individuals D) the combinations of i and Y that maintain equilibrium in financial markets Based on our understanding of the IS-LM model that takes into account dynamics, we know that a reduction in the money supply will cause A) an immediate drop in Y and immediate increase in i. B) an immediate increase in i and no initial change in Y. C) a gradual increase in i and gradual reduction in Y. D) none of the above Based on our understanding of the IS-LM model that takes into account dynamics, we know that a reduction in government spending will cause A) an immediate drop in Y and immediate increase in i.
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