In the Long-Run ISLM Model and with Everything Else Held

question 11

Multiple Choice

In the long-run ISLM model and with everything else held constant,the long-run effect of an expansionary monetary policy is to

• A)increase real output and the interest rate.
• B)not change either real output or the interest rate.
• C)increase real output and leave the interest rate unchanged.
• D)increase the interest rate and leave real output unchanged.

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Definitions:

Overactivity

The condition of being more active than is usual or desirable, often leading to restlessness or hyperactivity.

Anterior Cingulate

A region of the brain located in the medial frontal cortex that plays a role in various functions such as emotion regulation, impulse control, and decision-making.

Aversive Information

Information that is unpleasant or undesirable, which people may avoid or react negatively to.

Limbic System

Part of the brain that relays information from the primitive brain stem about changes in bodily functions to the cortex, where the information is interpreted.