Consider an Initial IS-LM Equilibrium in Which the Nominal Money

question 107

Multiple Choice

Consider an initial IS-LM equilibrium in which the nominal money supply is 1000 and the price level is 1.0.As the price level falls to 0.5,then to 0.333,and then to 0.25,the effect on real balances means that AD

• A)becomes flatter.
• B)shifts upward by less and less.
• C)shifts downward by less and less.
• D)shifts downward by the same amount.
• E)becomes upward-sloping at price levels below 1.0.

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Definitions:

Bank Reconciliation

Bank Reconciliation is the process of matching and comparing an organization’s financial records against the bank statements to ensure accuracy and consistency in the accounts.

NSF Check

A cheque that has been returned by a bank because the account it was drawn on did not have sufficient funds.

Outstanding Checks

Checks issued by a company awaiting cashing or clearance by the bank.

Adjusted Cash Balance

The cash amount shown in a company's books after adjustments have been made for checks outstanding, deposits in transit, and other factors.