8) Assume that the economy is initially operating at the natural level of output. A one-time 4% reduction in the nominal money supply will cause: A) a 4% increase in the price level in the medium run. B) a 4% reduction in the price level in the medium run. C) a 4% increase in the real money supply in the medium run. D) a 4% increase in the interest rate (i) in the medium run. E) a 4% reduction in investment in the medium run.

8) Assume that the economy is initially operating at the natural level of output. A one-time 4% reduction in the nominal money supply will cause: A) a 4% increase in the price level in the medium run. B) a 4% reduction in the price level in the medium run. C) a 4% increase in the real money supply in the medium run. D) a 4% increase in the interest rate (i) in the medium run. E) a 4% reduction in investment in the medium run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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