_____12. An increase in money supply shifts the: LM schedule downward to the lef
ID: 2495547 • Letter: #
Question
_____12. An increase in money supply shifts the:
LM schedule downward to the left.
LM schedule downward to the right.
LM schedule upward to the left.
LM schedule upward to the right.
The LM curve will shift into a fixed (vertical) position.
_____13. Which of the following statements are true:
At low income levels a significant change in interest rates are needed to restore equilibrium in the money market.
At low income levels a significant change in money supply is needed to restore equilibrium in the money market.
At low income levels only a slight change in interest rates are needed to restore equilibrium in the money market.
All statements are true.
No statements are true.
_____14. The LM curve shows the points of equilibrium in the money market between what two variable values?
income and output.
interest rates and aggregate demand.
money demand and money supply.
income and interest rates.
income and consumption.
_____15. Unlike the LM Curve which shows points of equilibrium in the money market, the IS curve shows points of equilibrium in the:
income market.
output market.
input market.
interest rate market.
demand market.
Explanation / Answer
12. LM schedule downward to the right.
Explanation: The LM curve, the equilibrium points in the market for money, shifts for two reasons: changes in money demand and changes in the money supply. If the money supply increases (decreases), ceteris paribus, the interest rate is lower (higher) at each level of Y, or in other words, the LM curve shifts right (left).
13. All statements are true.
14. money demand and money supply.
15. output market.
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