Author Question: Assume that the current demand for goods DOES depend on expectations in the IS-LM model. A monetary ... (Read 55 times)

jon_i · **on:** Jun 30, 2018

Assume that the current demand for goods DOES depend on expectations in the IS-LM model. A monetary expansion in the current period will cause a rightward shift in the IS curve if

A) current and expected future real interest rates are positively related.
B) current and expected future real interest rates are negatively related.
C) current and expected future real interest rates are unrelated.
D) the central bank is expected to reverse any current movements in monetary policy in the future.
E) monetary policy cannot affect, directly or indirectly, the position of the IS curve in the current period.

Question 2

The policy rate is

A) determined by monetary policy.
B) a real interest rate.
C) a risk premium.
D) entering the IS equation.