. If the central bank increases the nominal money supply M, a. the IS curve shifts to the left b. the IS curve shifts to the right c. the LM curve shifts to the left d. the LM curve shifts to the right e. the FE line shifts to the left f. the FE line shifts to the right If local banks increase the interest rate on their checking accounts, a. the IS curve shifts to the left b. the IS curve shifts to the right c. the LM curve shifts to the left d. the LM curve shifts to the right e. the FE line shifts to the left f. the FE line shifts to the right How does the FE-line shift if the government relaxes its migration laws and allows for a higher number of people from abroad? a. the IS curve shifts to the left b. the IS curve shifts to the right c. the LM curve shifts to the left d. the LM curve shifts to the right e. the FE line shifts to the left f. the FE line shifts to the right If the government increases the effective tax rate on capital, a. the IS curve shifts to the left b. the IS curve shifts to the right c. the LM curve shifts to the left d. the LM curve shifts to the right e. the FE line shifts to the left f. the FE line shifts to the right The general equilibrium in the IS-LM model occurs where a. the FE line intersects with the IS curve b. the FE line intersects with the LM curve c. the IS curve intersects with the LM curve d. Not information to tell.
IS-LM-PC Analysis
The IS (Investment Saving), LM (Liquidity Preference- Money Supply), and PC (Philips Curve) is the model that looks at the dynamics of output and inflation. It takes into account the central bank policy decision to adjust the inflation and real interest rate in the economy. It enables the economist to weather to priorities between employment and inflation rate analyzing the model. It is a practice-driven approach adopted by economists worldwide.
IS-LM Analysis
The term IS stands for Investment, Savings, and LM stands for Liquidity Preference, Money Supply. Therefore, the term IS-LM model is known as Investment Savings – Liquidity preference money Supply. This model was introduced by a Keynesian macroeconomic theory which shows the relationship between the economic goods market and loanable funds market or money market. In other words, it shows how the market for real goods interacts with the financial markets to strike a balance between the interest rate and total output in the macroeconomy. This particular model is designed in the form of a graphical representation of the Keynesian economic theory principle. The output and money are the two important factors in an economy.
Q1. If the central bank increases the nominal money supply M,
a. the IS curve shifts to the left
b. the IS curve shifts to the right
c. the LM curve shifts to the left
d. the LM curve shifts to the right
e. the FE line shifts to the left
f. the FE line shifts to the right
If local banks increase the interest rate on their checking accounts,
a. the IS curve shifts to the left
b. the IS curve shifts to the right
c. the LM curve shifts to the left
d. the LM curve shifts to the right
e. the FE line shifts to the left
f. the FE line shifts to the right
How does the FE-line shift if the government relaxes its migration laws and allows for a higher number of people from abroad?
a. the IS curve shifts to the left
b. the IS curve shifts to the right
c. the LM curve shifts to the left
d. the LM curve shifts to the right
e. the FE line shifts to the left
f. the FE line shifts to the right
If the government increases the effective tax rate on capital,
a. the IS curve shifts to the left
b. the IS curve shifts to the right
c. the LM curve shifts to the left
d. the LM curve shifts to the right
e. the FE line shifts to the left
f. the FE line shifts to the right
The general equilibrium in the IS-LM model occurs where
a. the FE line intersects with the IS curve
b. the FE line intersects with the LM curve
c. the IS curve intersects with the LM curve
d. Not information to tell.
Trending now
This is a popular solution!
Step by step
Solved in 7 steps
