Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market ________ of Japanese currency and creates a balance-of-payments ________ for the United States.

Suppose the central bank implements a monetary expansion in the current period and is expected to continue this monetary expansion in the future. Use the IS-LM model to illustrate graphically and explain the effects of this policy on current output and the current interest rate

What will be an ideal response?

When aggregate demand exceeds current production

A. both output and the price level are in equilibrium. B. output is not in equilibrium, but the price level is. C. prices are not in equilibrium, but output is. D. neither output nor the price level is in equilibrium.