As the LM curve becomes steeper, an unexpected decrease in ...

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As the LM curve becomes steeper, an unexpected decrease in consumer confidence
 
  A) will cause a relatively large increase in output and relatively large increase in the interest rate.
  B) will cause a relatively small increase in output and relatively small increase in the interest rate.
  C) is more likely to cause stock prices to rise.
  D) is more likely to cause stock prices to fall.

Question 2

Suppose the economy is operating on the LM curve but not on the IS curve. Given this information, we know that
 
  A) the goods market is in equilibrium and the money market is not in equilibrium.
  B) the money market and bond markets are in equilibrium and the goods market is not in equilibrium.
  C) the money market and goods market are in equilibrium and the bond market is not in equilibrium.
  D) the money, bond and goods markets are all in equilibrium.
  E) neither the money, bond, nor goods markets are in equilibrium.

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Answer to Question 1

C

Answer to Question 2

B