Reference no: EM131095203
1. Ceteris paribus, an increase in output (Y) causes the real money demand to {INCREASE, DECREASE, NOT CHANGE}, resulting in the real money demand curve to {SHIFT UP, SHIFT DOWN, NOT SHIFT}. As a result, at the new equilibrium in the asset market, the real interest rate (r) {RISES, FALLS, DOES NOT CHANGE}. The resulting {positive, negative, flat, vertical} relationship between Y and r is called the {IS, LM, REAL MONEY DEMAND, REAL MONEY} curve.
2. Suppose the asset market is in equilibrium. Given a constant output and a constant price level, an increase in nominal money supply requires the real interest rate to {rise, fall, not change} in order to maintain equilibrium in the asset market. This implies {A DOWNWARD, AN UPWARD, NO} shifting of the {IS, LM, REAL MONEY DEMAND, REAL MONEY} curve.
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Increase in output causes the real money demand
: Ceteris paribus, an increase in output (Y) causes the real money demand to {INCREASE, DECREASE, NOT CHANGE}, resulting in the real money demand curve to {SHIFT UP, SHIFT DOWN, NOT SHIFT}. As a result, at the new equilibrium in the asset market, the r..
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