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TAMU ECON 410 Final Review Questions With 100%
Correct Answers.2025 latest update
The LM curve, in the usual case: - (answers)slopes up to the right.
An explanation for the slope of the IS curve is that as the interest rate increases,
the quantity of investment _____, and this shifts the expenditure function ____,
thereby decreasing income. - (answers)decreases; downward
In the IS-LM model, which two variables are influenced by the interest rate? -
(answers)demand for real money balances and investment spending
One policy response to the U.S. economic slowdown of 2001 was to increase
money growth. This policy response can be represented in the IS-LM model by
shifting the ____ curve to the ____. - (answers)LM; right
When bond traders for the Federal Reserve seek to increase interest rates, they
____ bonds, which shifts the ____ curve to the left. - (answers)Sell; LM
The reason that the income response to a fiscal expansion is generally less in the
IS-LM model than it is in the Keynesian-cross model is that the Keynesian-cross
model assumes that; - (answers)investment is not affected by the interest rate
whereas in the IS-L model fiscal expansion raises the interest rate and crowds out
investment.
TAMU ECON 410 Final Review Questions With 100%
Correct Answers.2025 latest update
The LM curve, in the usual case: - (answers)slopes up to the right.
An explanation for the slope of the IS curve is that as the interest rate increases,
the quantity of investment _____, and this shifts the expenditure function ____,
thereby decreasing income. - (answers)decreases; downward
In the IS-LM model, which two variables are influenced by the interest rate? -
(answers)demand for real money balances and investment spending
One policy response to the U.S. economic slowdown of 2001 was to increase
money growth. This policy response can be represented in the IS-LM model by
shifting the ____ curve to the ____. - (answers)LM; right
When bond traders for the Federal Reserve seek to increase interest rates, they
____ bonds, which shifts the ____ curve to the left. - (answers)Sell; LM
The reason that the income response to a fiscal expansion is generally less in the
IS-LM model than it is in the Keynesian-cross model is that the Keynesian-cross
model assumes that; - (answers)investment is not affected by the interest rate
whereas in the IS-L model fiscal expansion raises the interest rate and crowds out
investment.
