8. According to Abel, Bernanke and Croushore, the LM curve is upward A. Higher o

Question

8. According to Abel, Bernanke and Croushore, the LM curve is upward A. Higher output raises savings and leads to a lower market-clearing real interest rate. B. Higher output lowers savings and leads to a higher interest rate that clears the asset market interest rate that clears the asset market. real rate and thus lowers the real D. Higher output raises money demand, and thus raises the real E. None of the above. M*-M-C MP,LP..(P)...C-M-M* 9. In the extended circuit of capital above, according to Foley, M* A. Stands for the payment of interest to the financial capitalist. B. Stands for the payment of interest and principle to the industrial capitalist. C. Stands for D. Stands for productive capital in plant and equipment. E. None of the above. capital as unsold inventories. 10. According to Foley, if we abstract from the uncertainty of realization and the possibility of bankruptcy, capital firms would A. Bid the interest rate to equality to the Federal Funds rate. B. Bid the interest rate to the rate of surplus value. C. Bid the interest rate to the average rate of profit. D. Bid the interest rate to the rate of inflation. E. None of the above. 11. In the neoclassical growth model, a decrease in the savings rate e level of per capita output. A. Raises the st B. Does not affect the steady-state level of per capita output. C. Lowers the steady-state level capital-labor ratio. D. Raises the steady-state capital-labor ratio. E. None of the above. 12. According to Abel, Bernanke and Croushore, the IS shows A. The real interest rate for which the asset market is in equilibrium B. The real interest rate for which exports equal imports. C. The real interest rate for which the goods market is in equilbrium. D. The real interest rate for which the goods market is in equilibrium. E. None of the above. 3

Explanation / Answer

8) The answer is D-) Higher output raises money demanded and thus raises the real interest rate that clears the asset market.

because, as the output increase or people income increase, they encourage more saving than its consumption and hence they demand more for money as a result the supply of money decrease in the economy which increase the real interest rate and clears the assets market. therefore LM curve sloping upward.

9) Please upload it again. it against chegg policy

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