Question 3 (1 point) A decrease in the money supply causes the _____ curve to sh

Question

Question 3 (1 point)

A decrease in the money supply causes the _____ curve to shift to the left and equilibrium output to

Question 3 options:

LM, fall.

LM, rise.

IS, rise.

IS, rise.

Question 4 (1 point)

A decrease in government spending causes the _____ curve to shift to the

Question 4 options:

LM, right.

LM, left.

IS, right.

IS, right.

Save

Question 5 (1 point)

Both equilibrium output and the interest rate will fall if

Question 5 options:

imports rise.

exports fall.

government spending falls.

all of the above.

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Question 6 (1 point)

If the marginal propensity to consume is 0.75 and autonomous consumption rises by $100, then equilibrium output on the Keynesian cross diagram (for a fixed interest rate) rises by

Question 6 options:

$0.00

$75.00

$100.00

$400.00

Question 7 (1 point)

Money neutrality implies that a change in the money supply only affects

Question 7 options:

output.

the price level.

unemployment.

none of the above.

Question 3 (1 point)

A decrease in the money supply causes the _____ curve to shift to the left and equilibrium output to

Question 3 options:

LM, fall.

LM, rise.

IS, rise.

IS, rise.

Question 4 (1 point)

A decrease in government spending causes the _____ curve to shift to the

Question 4 options:

LM, right.

LM, left.

IS, right.

IS, right.

Save

Question 5 (1 point)

Both equilibrium output and the interest rate will fall if

Question 5 options:

imports rise.

exports fall.

government spending falls.

all of the above.

Save

Question 6 (1 point)

If the marginal propensity to consume is 0.75 and autonomous consumption rises by $100, then equilibrium output on the Keynesian cross diagram (for a fixed interest rate) rises by

Question 6 options:

$0.00

$75.00

$100.00

$400.00

Question 7 (1 point)

Money neutrality implies that a change in the money supply only affects

Question 7 options:

output.

the price level.

unemployment.

none of the above.

Explanation / Answer

3)LM,fall

4)IS,Left

5)import rise(shifts IS to the left)

6)The multiplier is (a/1-b) where a is autonomous consumption and b is marginal propensity to consume. Thus it comes as (100/1-0.75)=400

7)Nutrality of money means that it only affects nominal variable and not real variable. Thus it affects none of the above in the given options.

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