1.Monetary equilibrium occurs when the Question options: A) supply and demand for all goods in the economy are equal at the current rate of interest. B) existing supply of money is willingly held by households and firms in the economy at the current rate of interest. C) growth in the money supply is zero. D) the money supply is growing at a constant rate. E) nominal rate of interest equals the real rate of interest. 2.The economy starts in long-run equilibrium. After an initi
1.Monetary equilibrium occurs when the
Question options:
A) supply and
B) existing supply of money is willingly held by households and firms in the economy at the current rate of interest.
C) growth in the money supply is zero.
D) the money supply is growing at a constant rate.
E) nominal rate of interest equals the real rate of interest.
2.The economy starts in long-run equilibrium. After an initial shock, and the subsequent adjustment process, the economy ends up at a point with a higher price level and the initial level of real GDP. Which of the following initial shocks would explain this?
Question options:
a) An increase in desired savings.
b) An increase in government transfer payments.
c) An appreciation of the Canadian dollar.
d) An improvement in production technology.
e) An increase in the cost of factor inputs.
3.The economy starts in long-run equilibrium. After an initial shock, and the subsequent automatic adjustment process, the economy ends up at a point with a lower price level and the initial level of real GDP. Which of the following initial shocks would explain this?
Question options:
a) An improvement in production technology.
b) An increase in government spending.
c) An increase in the net tax rate.
d) An increase in exports.
e) A
4.Consider the simple macro model with demand-determined output and constant prices. If inventories are accumulating, this is likely a sign that:
Question options:
a) Potential GDP is greater than actual GDP.
b) Potential GDP is less than actual GDP.
c) Desired aggregate expenditure is less than actual national income.
d) Desired aggregate expenditure is greater than actual national income.
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