Suppose We Have Normally-Sloped IS and LM Curves Intersecting at Point

question 143

Multiple Choice

Suppose we have normally-sloped IS and LM curves intersecting at point A.Then a monetary policy change shifts the LM curve to the right.Directly below point A we find a point on the new LM curve that shows us

• A)where the new IS-LM equilibrium occurs.
• B)how much the interest rate must fall to raise planned expenditures to the new equilibrium income.
• C)how much the interest rate must fall to by itself raise the demand for money by as much as the money supply has decreased.
• D)how much income must rise to by itself raise the demand for money by as much as the money supply has increased.
• E)how much the interest rate must fall to by itself lower the demand for money by as much as the money supply has decreased.

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