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:

Independent Variable

The factor in a controlled experiment that is being manipulated.

Experimenter

A person who conducts scientific tests and trials to explore hypotheses and examine the effects of variables.

Manipulated

Altered or controlled in a skillful or sometimes deceitful manner, often to achieve a specific outcome.

Unified Dynamic Structure

A system or organization in which different components work together in a coordinated and dynamic manner to achieve common goals.