20) Suppose that the central bank must follow a rule that requires it to increase the money supplywhen the price level falls and decrease the money supply when the price level rises. If theeconomy starts from long-run equilibrium, but then the central bank must act to increaseinterest rates,aggregate supply must have shifted left.aggregate demand must have shifted left and aggregate supply must haveshifted right.aggregate supply must have shifted right.aggregate demand must have shifted left.

When the central banks increase the money supply during falling prices (deflation) and decrease the…

Answered: 20) Suppose that the central bank must…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

2) Please answer the following parts: A. Describe the short-run effects of a rise in oil prices. B. Describe the adjustment to the long-run equilibrium. What variable should adjust for that to happen? C. Explain how the government should react in order to offset the effects of this shock on output. What will be the result regarding the price level? D. Explain how the Fed should react in order to offset the effects of this shock on output. What will be the result regarding the price level?
#6
14) The level of aggregate output demanded will increase if A) the money supply is increased. C) All, A, B, and D, are very likely. B) the interest rate is reduced. D) net taxes are reduced.
If the economy begins at a short-run equilibrium below potential output, then there would be a- downward pressure on wages and prices and the short-run aggregate supply curve will eventually shift down/right b- downward pressure on wages and prices and the short-run aggregate supply curve will eventually shift up/left c- upward pressure on wages and prices and the short-run aggregate supply curve will eventually shift down/right d- upward pressure on wages and prices and the short-run aggregate supply curve will eventually shift up/left
22. When the aggregate demand curve and the short-run aggregate supply curve intersect, A) the long-run aggregate supply curve must also intersect at the same point. B) inflation must be increasing. C) structural and frictional unemployment equal zero. D) the economy is in short-run macroeconomic equilibrium. 23. Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short run? A) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. B) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. C) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. D) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall.
24. If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium, A) GDP will be below potential GDP. B) aggregate demand will increase. C) GDP will be above potential GDP. D) GDP will be equal to the potential GDP 25. A negative supply shock in the short run causes A) the aggregate supply curve shifts to the left. B) the price level to fall. C) unemployment to fall. D) equilibrium real GDP to rise.
28. Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo, and AD1 and AS1 represent changes, which of the above graphs depict the economy's self-correcting mechanism at work? a) Figures A & B b) Figures A & C c) Figures C & D d) Figures B & D
Blank 1 answer choices: no change, an increase, a decrease Blank 2 answer choices: no change in level output, more output, less output
part d
✔ 2 Aplia Assignment Ch 20 4. Determinants of aggregate supply The following graph shows a decrease in short-ron aggregate supply (AS) in a hypothetical economy where the currency is the dollar Specifically, the short-un aggregate supply curve shifts to the left from AS, to AS, causing the quantity of output supplied at a price level of 100 to fall from $200 billion to $150 billion K 1 1 **### PRICE LEVEL 200 20 QUANTITY OF OUTPUT 380 400 The following table lists several determinants of short-run aggregate supply. Regulations on the firm Tax rates Input prices Complete the table by selecting the changes in each scenario necessary to decrease short-run aggregate supply Change Necessary to Decrease AS Grade It Now Save & Continue Continue without saving
Confused and not sure how to answer
According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to A) decreases in both the price level and real GDP. B) an increase in real GDP and an increase in the price level. C) a decrease in the price level but does not change real GDP. D) an increase in the price level but does not change real GDP.

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS