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25. To reach general equilibrium, the price level adjusts to shift the _____ until it intersects with the _____. (a) IScurve; FEline and LMcurve (b) FEline; LMand IScurves (c) LMcurve; FEline and IScurve (d) NDcurve; FEline and NScurve Answer: C Level of difficulty: 1 Section: 9.4 26. What adjusts to restore general equilibrium after a shock to the economy? 27. The IS-LMmodel predicts that a temporary beneficial supply shock 28. A temporary supply shock, such as a bumper crop, would 29. A temporary supply shock, such as an increase in oil prices, would (a) shift the IScurve down and to the left and leave the FEline unchanged. (b) shift the IScurve down and to the left and shift the FEline to the left. (c) shift the IScurve up and to the right, but leave the FEline unchanged. (d) have no effect on the IScurve. Answer: D Level of difficulty: 2 Section: 9.4
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138 Abel/Bernanke • Macroeconomics, Fifth Edition 30. You have just read that Australia has suffered a drought, destroying its wheat crop for this year. The effect of this adverse supply shock on Australia would probably be 31. A temporary adverse supply shock directly causes
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