Answer
Option A
the increase in consumer wealth increases consumption and investment spending which increases the aggregate demand which shifts the IS curve to the right and increases the interest rate and real output in the new equilibrium.
12) In the IS-LM Model, assuming a downward sloping IS curve and an upward sloping LM...
12) In the IS-LM Model, assuming a downward slop Model, assuming a downward sloping IS curve and an upward sloping LM curve; an increase in consumer wealth is going to A) cause a rightward shift of the IS curve. B) cause a rightward shift of the LM curve. C) cause a movement along the IS curve. D) cause a leftward shift of the LM curve. 13) The biggest difference between the 2008-09 recession and its aftermath, as compared to the...
An increase in spending growth causes: A:an upward movement along the AD curve. B:a rightward shift of the AD curve. C:a downward movement along the AD curve. D:a leftward shift of the AD curve.
6.- A decrease in the price of coffee, other things being equal, causes an): a. downward movement along the demand curve for coffee. b. leftward shift in the demand curve for coffee. c. upward movement along the demand curve for coffee. d. rightward shift in the demand curve for coffee.
136) Assuming all else equal, if a bank expects a bank run in the future: 136) A) there will be an upward movement along its demand curve for reserves. B) there will be a downward movement along its demand curve for reserves. C) its demand curve for reserves will shift to the right. D) its demand curve for reserves will shift to the left. 137) Which of the following will NOT cause a shift in the demand curve for reserves?...
An increase in consumer incomes will lead to A. a movement upward along the demand curve for plasma TVs. B. no change of the demand curve for plasma TVs. C. a rightward shift of the supply curve for plasma TVs. D. a rightward shift of the demand curve for plasma TVs.
What is the shape of the intermediate zone of the AD-AS curve? horizontal upward-sloping downward-sloping When does the GDP gap shrink? It shrinks as the government reduces the budget deficit through discretionary fiscal policy. It shrinks as the economy recovers from recession. It shrinks as the economy is contracting with government intervention. Since the change in GDP is a greater change than in the expenditure model the multiplier has a value ________. greater than one equal to one A rightwards...
Financial markets and the LM relation. a) Explain why the money demand curve is downward sloping and what b) What types of policies can the central bank implement to reduce the interest c) Define the velocity of money. What effect does an increase in interest rate d) Illustrate graphically the effect of a drop in nominal income on the money e) Illustrate graphically the effect of a purchase of bonds by the Federal Reserve factor(s) cause shifts in the money...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium occurs where the two intersect. The value on the vertical axis is the equilibrium price level and the value on the horizontal axis is the equilibrium value of real GDP or output. What happens to the economy when AD shifts? It is useful to sketch a graph and show the shift. Suppose, for example, interest rates fall or wealth increases due to a stock...
When the price level increases, aggregate planned expenditure decreases, which leads to A. a rightward shift of the aggregate demand curve. B. a leftward shift of the aggregate demand curve. C. an upward movement along the aggregate demand curve. D. a downward movement along the aggregate demand curve. E. neither a movement along nor a shift of the aggregate demand curve.
7. A downward-sloping investment function yields a falling IS curve, but a downward-sloping demand for real money balance curve yields a rising LM curve. Why?