Suppose That the IS Curve Is Stable and Money Demand

question 22

Multiple Choice

Suppose that the IS curve is stable and money demand is lower than forecasted.If the Fed is targeting the interest rate,it notices the rate is ________ its target,and action to correct this,shifting the LM curve to the ________,causes GDP to ________ natural GDP.

• A)below,right,fall back toward
• B)below,right,rise further from
• C)below,left,return to
• D)above,left,fall back from
• E)above,right,rise further from

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