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?
- Impact of monetary policy
- Equilibrium in the goods market
- Impact of fiscal policy
- Equilibrium in the money market (correct)
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?
- There is no change in the equilibrium
- The equilibrium moves to point B (correct)
- Income rises from 𝒀𝟏 to 𝒀𝟐, and the interest rate rises from 𝒓𝟏 to 𝒓𝟐.
- The equilibrium moves to point A
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?
- Shifts the LM curve to the right
- Leads to a decrease in income and interest rate
- Shifts the IS curve to the right (correct)
- It shifts the IS curve to the left
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?
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?
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?
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?
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?
What are IS shocks in the IS-LM model?
What are IS shocks in the IS-LM model?
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?
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?
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?
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?
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?
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?
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?
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?
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?
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?
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?
