Figure 34-3 (a) The Money Market (b) The Aggregate Demand Curve MS MD, MD. AD Y: Y, QUANTITY OF MONEY QUANTITY OF OUTPUT Refer to Figure 34-3. Which of the following sequences (numbered arrows) shows the logic of the interest-rate effect on the slope of aggregate demand? О а. 3, 4, 2, 1 О Б. 1,4, 3, 2 O c. 1, 2, 3, 4 O d. 3, 2, 1,4 INTEREST RATE PRICE LEVEL

Figure 34-3 (a) The Money Market (b) The Aggregate Demand Curve MS MD, MD. AD Y: Y, QUANTITY OF MONEY QUANTITY OF OUTPUT Refer to Figure 34-3. Which of the following sequences (numbered arrows) shows the logic of the interest-rate effect on the slope of aggregate demand? О а. 3, 4, 2, 1 О Б. 1,4, 3, 2 O c. 1, 2, 3, 4 O d. 3, 2, 1,4 INTEREST RATE PRICE LEVEL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume, in the 3rd quarter of 2018 in the U.S., the velocity of money was 3.08 and the M2 money supply was $1,050 million. The average prices in the economy was $1.44. Based on this, what was the real GDP of the U.S. in the 3rd quarter of 2018. O a. $2,750 million Ob. $1,250 million O C. $2,000 million O d. 52.250 million
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7. Everything else held constant, if aggregate output is to the right of the LM curve, then there is an excess of money which will cause the interest rate to A) supply; fall B) supply; rise. C) demand: fall- D) demand; rise 8. If the economy is on the LM curve, but is to the right of the IS curve, aggregate output will and the interest rate will A) rise; rise. B) rise; fall. C) fall; rise. D) fall; fall
5. The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. PRICE LEVEL Suppose the economy produces real GDP of $60 billion when unemployment is at its natural rate. 132 128 124 Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. 120 116 112 108 The inflation rate 104 The quantity of physical capital The size of the labor force 100 The price level 0 10 20 30 40 50 60 OUTPUT (Billions of dollars) 70 80 S Not affect the long-run aggregate supply curve O Shift the long-run aggregate supply curve to the left Shift the long-run aggregate supply curve to the right c 3 LRAS Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment to , which will: ? In the following…
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In economies with persistently high inflation, an increase in the money supply will: not affect the real quantity of money, making money neutral in the long run.. O positively affect aggregate real output in the long run. O negatively affect the real quantity of money, as the aggregate price level increases by more than the money supply. O positively affect the real quantity of money in the long run.
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13) The aggregate demand curve shows a(n). relationship between the A) positive; interest rate and planned investment B) negative; interest rate and planned investment C) negative; interest rate and money demand D) inverse; price level and aggregate output
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7. Consider the money market. Suppose the U.S. economy begins to boom and aggregate output increases. Describe the effect on the interest rate if the Federal Reserve decides to increase the money supply at the same time that aggregate output increases.