Consider the strength of monetary forces. The effectiveness of monetary policy in bringing about changes in real GDP is enhanced when the OA. investment demand curve and money demand function are both relatively flat. B. investment demand curve and money demand function are both relatively steep. C. investment demand curve is relatively steep and the money demand function is relatively flat. OD. investment demand curve is relatively flat and the money demand function is relatively steep. OE. None of the above-monetary policy is always equally effective.

Consider the strength of monetary forces. The effectiveness of monetary policy in bringing about changes in real GDP is enhanced when the OA. investment demand curve and money demand function are both relatively flat. B. investment demand curve and money demand function are both relatively steep. C. investment demand curve is relatively steep and the money demand function is relatively flat. OD. investment demand curve is relatively flat and the money demand function is relatively steep. OE. None of the above-monetary policy is always equally effective.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The long-run Phillips curve is vertical because it is O a. consistent with the conclusion of Friedman and Phelps, but it is not consistent with the classical idea of monetary neutrality. Ob. consistent with the classical idea of monetary neutrality, but it is not consistent with the conclusion of Friedman and Phelps. Oc. consistent with both the conclusion of Friedman and Phelps and the classical idea of monetary neutrality. Od. consistent with neither the conclusion of Friedman and Phelps nor the classical idea of monetary neutrality. QUESTION 41 If there is a favorable supply shock, inflation will O a. increase and shift the short-run Phillips curve left. Ob. decrease and shift the short-run Phillips curve right. Oc. increase and shift the short-run Phillips curve right. Od. decrease and shift the short-run Phillips curve left. QUESTION 42 If there is a favorable supply shock causes, then O a. the price level decreases. To counter this a central bank would decrease the money supply.…
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4. Consider the money market model with the interest rate and the AD-AS model. In cases below, choose correct change in the interst rate and correct shift of the AD curve. 4.a. Central bank increased the money supply. Change in interest rate: Decrease or Increase Shift of AD: Leftward or Rightward 4.b. Central bank decreased the money supply. Change in interest rate: Decrease or Increase Shift of AD: Leftward or Rightward 5. Suppose that the economy fell into a recession. Which is the usual policy the central bank uses to stabilize the economy: Contractionary monetary policy or Expansionary monetary policy?
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