If the fed adopts a policy of pegging the interest

Info icon This preview shows pages 14–16. Sign up to view the full content.

View Full Document Right Arrow Icon
132) If the Fed adopts a policy of pegging the interest rate, a _____ in government spending forces the Fed to ____ the money supply to prevent interest rates from ______. (a) fall; increase; increasing (b) fall; increase; decreasing (c) fall; decrease; increasing (d) rise; increase; increasing (e) rise; increase; decreasing Answer: D Question Status: Study Guide 133) The rate of output at which the price level has no tendency to rise or fall is called the 134) In the long-run ISLM model, as long as the level of output _____ the natural rate level, the price level will continue to _____, shifting the LM curve to the _____, until finally output is back at the natural rate level.
Image of page 14

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
888 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition 135) In the long-run ISLM model, as long as the level of output _____ the natural rate level, the price level will continue to _____, shifting the LM curve to the _____, until finally output is back at the natural rate level. 136) In the long-run ISLM model, an increase in the money supply leaves the level of output and interest rates unchanged, an outcome called (a) interest rate overshooting. (b) long-run money neutrality. (c) long-run crowding out. (d) the long-run Phillips curve. Answer: B Question Status: Previous Edition 137) In the long-run ISLM model, the long-run effect of an expansionary monetary policy is to 138) The long-run neutrality of money refers to the fact that in the long run, monetary policy
Image of page 15
Image of page 16
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern