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

question 53

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 real 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:

Carrying Value

The net amount at which an asset or liability is valued in the balance sheet, considering factors like depreciation, amortization, or impairment charges.

Bond Redemption

The process in which a bond issuer returns the bond's principal amount to the bondholders and terminates the bond.

Straight-Line Method

A method of calculating depreciation or amortization by evenly distributing the cost of an asset over its useful life.

Premium on Bonds Payable

The excess amount over the face value for which a bond is sold, indicating that it was issued at a higher rate than its nominal value.