1. The money demand curve will shift to the left when The money demand curve will shift to the right when an increase in income occurs. 

an open market sale of bonds by the central bank occurs. 

all of these 

none of these  

2. The LM curve represents 

The IS curve represents the single level of output where financial markets are in equilibrium. 

the single level of output where the goods market is in equilibrium. 

he combinations of output and the interest rate where the money market is in equilibrium. 

the combinations of output and the interest rate where the goods market is in equilibrium.

none of these  

 3. Changes in GDP in the short run are caused primarily by Changes in GDP in the medium run are determined primarily by all of these supply factors. none of these demand factors.

4. If policy makers reduce taxes, this action will cause If policy makers pursue expansionary monetary policy, this action will cause 

The LM curve shifts down. 

The LM curve shifts up. 

The IS curve shifts and the economy moves along the LM curve. 

none of these 

The IS curve shifts leftward as the interest rate increases. 

5. Suppose there is a simultaneous central bank purchase of bonds and tax cut. We know with certainty that this combination of policies must cause Suppose there is a simultaneous central bank purchase of bonds and increase in taxes. We know with certainty that this combination of policies must cause a reduction in Y. an increase in the interest rate (i). a reduction in i. an increase in output (Y).