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Macroeconomic Modeling
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If the interest rate is above the equilibrium value, the:
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The theory of liquidity preference implies that:
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According to the theory of liquidity preference, if the supply of real money balances exceeds the demand for real money balances, individuals will:
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According to the theory of liquidity preference, if the demand for real money balances exceeds the supply of real money balances, individuals will:
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When the LM curve is drawn, the quantity that is held fixed is:
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Along any given IS curve:
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The IS curve shows combinations of ______ that are consistent with equilibrium in the market for goods and services.
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An increase in taxes shifts the IS curve, drawn with income along the horizontal axis and the interest rate along the vertical axis:
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Based on the Keynesian model, one reason to support government spending increases over tax cuts as measures to increase output is that:
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An increase in government spending generally shifts the IS curve, drawn with income along the horizontal axis and the interest rate along the vertical axis:
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