Author Question: Suppose the Fed increases the money supply in the current period with no other policy change ... (Read 43 times)

tingc95 · **on:** Jun 30, 2018

Suppose the Fed increases the money supply in the current period with no other policy change implemented or anticipated. This policy action will cause which of the following shifts in the IS and/or LM curves in the current period?

A) IS left; LM up
B) IS right; LM up
C) no shift in IS; LM down
D) IS left; LM down
E) IS right; LM down

Question 2

Given the zero lower bound on the nominal rate, the lowest real interest rate the central bank can achieve is

A) - .
B) .
C) 0.
D) i.