10. Suppose IS-LM intersect at Y*. If the FE line does not intersect at the same point, what is true about Y*? Y* is the equilibrium output in the economy showing the current state of economic activity Y* is the full-potential 11. When the FE line is to the right of the intersection of IS&LM, then the economy is Below full-potential Above full potential 12. IS captures equilibrium. Hence, along the IS curve every single point shows where Y= CP+1"+G MS/P = L(r+*) 13. LM captures equilibrium. Hence, along the LM curve every single point shows where Y= CP+1"+G MS/P = L(r+*) 14. Circle all the factors that will cause LM curve to shift: MS T G Confidence (about economy) tax on capital (t) p PK 15. Circle all the factors that will cause IS curve to shift: M T G Confidence (about economy) tax on capital (T) P PK 16. If a shock to the output market causes demand for goods and services to rise, then the IS curve shifts Inwards Outwards 17. If a shock to the market for money causes r to rise, then the LM curve shifts Inwards Outwards