This pack of ECO 316 Week 4 Chapter 24 Linking the Financial System and the Economy The IS-LM-FE Model contains:

24.1 Multiple Choice Questions

1) Why did the Fed cut interest rates in late 1991?

2) Why did the Fed cut interest rates in late 1998?

3) A general equilibrium is an outcome in which

4) The money market includes trade in

5) Purchases and sales of stocks, bonds, and houses take place

6) In macroeconomic models, Y typically represents

7) In macroeconomic models, Y stands for

8) An increase in the expected profitability of investment will cause

9) A closed economy is one in which

10) In a closed economy, the total quantity of goods demanded equals the sum of

11) In a closed economy, the goods market is in equilibrium when

12) In a closed economy, if the goods market is in equilibrium, national saving is $2 trillion, national consumption is $7 trillion, and government purchases are $2.5 trillion, then GDP equals

13) In a closed economy, national saving equals

14) For the goods market to be in equilibrium in a closed economy, which of the following must be true?

15) Which of the following is NOT a key factor in determining household saving?

16) An increase in the expected real interest rate will have a

17) An increase in government purchases reduces national saving as long as

18) Evidence suggests that when government purchases rise

19) An increase in the real interest rate will

20) In the saving-investment diagram, an increase in output will lead to

21) In the savings-investment diagram, we know that an increase in the real interest rate raises the level of saving because

22) The IS curve depicts the relationship between

23) In a move down the IS curve,

24) In a move up the IS curve,

25) At points not on the IS curve,

26) At a point above the I