Podcast
Questions and Answers
In the IS-LM model, what does the LM curve represent?
In the IS-LM model, what does the LM curve represent?
What happens to the equilibrium in the IS-LM model when there's an increase in government purchases?
What happens to the equilibrium in the IS-LM model when there's an increase in government purchases?
How can the IS-LM model be used to analyze the effects of a tax cut?
How can the IS-LM model be used to analyze the effects of a tax cut?
What is the unique combination determined by the intersection of the IS and LM curves in the IS-LM model?
What is the unique combination determined by the intersection of the IS and LM curves in the IS-LM model?
Signup and view all the answers
How can the IS-LM model be used to analyze the impact of monetary policy?
How can the IS-LM model be used to analyze the impact of monetary policy?
Signup and view all the answers
What happens to income and interest rate as a result of an increase in money supply, according to the IS-LM model?
What happens to income and interest rate as a result of an increase in money supply, according to the IS-LM model?
Signup and view all the answers
In response to an increase in government spending, if the central bank holds the money supply constant, what happens to income and the interest rate?
In response to an increase in government spending, if the central bank holds the money supply constant, what happens to income and the interest rate?
Signup and view all the answers
If the central bank decides to hold the interest rate constant in response to an increase in government spending, what happens to the money supply, income, and the impact compared to holding money supply constant?
If the central bank decides to hold the interest rate constant in response to an increase in government spending, what happens to the money supply, income, and the impact compared to holding money supply constant?
Signup and view all the answers
What are IS shocks in the IS-LM model?
What are IS shocks in the IS-LM model?
Signup and view all the answers
According to the IS-LM model, what happens when consumers use cash in transactions more frequently due to an increase in identity theft?
According to the IS-LM model, what happens when consumers use cash in transactions more frequently due to an increase in identity theft?
Signup and view all the answers
In the IS-LM model, when analyzing the effects of a tax cut, what happens to the LM curve?
In the IS-LM model, when analyzing the effects of a tax cut, what happens to the LM curve?
Signup and view all the answers
If there is a decrease in government purchases in the IS-LM model, what happens to the equilibrium in the short run?
If there is a decrease in government purchases in the IS-LM model, what happens to the equilibrium in the short run?
Signup and view all the answers
When analyzing the impact of monetary policy using the IS-LM model, what happens if the central bank decreases the money supply?
When analyzing the impact of monetary policy using the IS-LM model, what happens if the central bank decreases the money supply?
Signup and view all the answers
If there's an increase in government purchases and the central bank holds the money supply constant in response, what happens to income and interest rate?
If there's an increase in government purchases and the central bank holds the money supply constant in response, what happens to income and interest rate?
Signup and view all the answers
What happens to income and interest rate if there's a simultaneous increase in government purchases and money supply in the IS-LM model?
What happens to income and interest rate if there's a simultaneous increase in government purchases and money supply in the IS-LM model?
Signup and view all the answers
In the IS-LM model, what happens to income and the interest rate as a result of a housing market crash that reduces consumers' wealth?
In the IS-LM model, what happens to income and the interest rate as a result of a housing market crash that reduces consumers' wealth?
Signup and view all the answers
How does the IS-LM model predict the effects of consumers using cash in transactions more frequently in response to an increase in identity theft?
How does the IS-LM model predict the effects of consumers using cash in transactions more frequently in response to an increase in identity theft?
Signup and view all the answers
What is the impact of holding the money supply constant in response to an increase in government spending, according to the IS-LM model?
What is the impact of holding the money supply constant in response to an increase in government spending, according to the IS-LM model?
Signup and view all the answers
If the central bank holds the interest rate constant in response to an increase in government spending, what happens to income and the money supply, compared to holding 𝑴 constant?
If the central bank holds the interest rate constant in response to an increase in government spending, what happens to income and the money supply, compared to holding 𝑴 constant?
Signup and view all the answers
What is the effect of an increase in 𝑮 on income and the interest rate if the central bank holds 𝒓 constant?
What is the effect of an increase in 𝑮 on income and the interest rate if the central bank holds 𝒓 constant?
Signup and view all the answers
