Question 16 (1 point) Points to the right of the LM curve show an excess Questio

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Question 16 (1 point)

Points to the right of the LM curve show an excess

Question 16 options:

demand for goods.

demand for money.

supply of goods.

none of the above

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Question 17 (1 point)

G in the aggregate demand equation represents

Question 17 options:

federal government spending.

state government spending.

local government spending.

all of the above.

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Question 18 (1 point)

Which of the following is NOT a change in fiscal policy?

Question 18 options:

decrease the money supply

increase taxes

increase social security funding

All are changes in fiscal policy.

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Question 19 (1 point)

In the IS-LM model, policy is said to be ineffective in the long run because it cannot change

Question 19 options:

the price level.

output.

the interest rate.

all of the above.

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Question 20 (1 point)

If investment falls and the central bank increases the money supply to compensate, then _____ must _____

Question 20 options:

output, rise.

output, fall.

interest rate, rise.

interest rate, fall.

demand for goods.

demand for money.

supply of goods.

none of the above

Explanation / Answer

16)Excess demand for money

17)As G indicates Government spending, so all sorts of government spending will be included. Thus all of the above.

18)Decrease in the money supply is a monetary policy

19)Price level is taken fixed in the IS LM model and thus cannot be used in long run.

20)Interest rate falls(IS curve shifts to the left because of decrease in investment and LM curve shifts to the right because of increase in money supply).

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