Answer to Question #275976 in Macroeconomics for minnie

Question

In the long-run the IS-LM model predicts that:

a) Only monetary policy can change real output.

b) Only fiscal policy can change real output.

c) Both monetary and fiscal policy can change real output.

d) Monetary and fiscal policies change real output only when used together.

e) Neither monetary nor fiscal policy can change real output.

Contractionary monetary policies, other things being equal, will

a) Move the economy down a fixed aggregate demand curve.

b) Move the economy up a fixed aggregate demand curve.

c) Shift the aggregate demand curve to the right.

d) Shift the aggregate demand curve to the left.

e) None of the above.

n the long-run IS-LM model, the long-run effect of a contractionary fiscal policy is to: a) Increase real output and the interest rate.

b) Decrease real output and the interest rate.

c) Increase real output and leave the interest rate unchanged.

d) Decrease the interest rate and leave real output unchanged. e) Not change either real output or the interest rate.

Answer 1

(e)

(d)

(b)