Opositively affect aggregate real output in the long run. negatively affect the real quantity of money, as the aggregate price level increases by more than the money supply. Opositively affect the real quantity of money in the long run.
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- In the market for real output, the initial effect of an increase in the money supply is to O a. shift aggregate demand to the right O b. shift aggregate supply to the left O c. shift aggregate supply to the right O d. shift aggregate demand to the leftSuppose 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. O The size of the labor force O The level of technological knowledge The price level The inflation rate Suppose the economy produces real GDP of $40 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. 132 128 LRAS 124 120 116 Q112 + PRICE LEVELWhat sort of event could lead to a simultaneous decrease in the rates of inflation and unemployment? an increase in money supply a decrease in raw material prices a decrease in money supply O an adverse supply shock
- Which of the following will lead to an increase in the equilibrium interest rate in the money market? a. Increase in general price level O b. An increase in income O c. Decrease in general price level d. The Central Bank increases money supplyA reduction in money supply will cause: a reduction in investment in the medium run O A. OB an increase in the interest rate in the medium run В. Oca reduction in the interest rate in the short run O pa rise in real wage in the short run none of the choices is correct OE. O E a proportionate rise in the price level in the medium runWhich of the following would lead to a decrease in the equilibrium interest rate? O a. Decrease the money demand O b. Decrease the money supply Ос. Increase in money demand O d. Increase the money supply O e. Directly lower the interest rate and change neither the money demand nor the money supply
- The demand for money increases and the demand for money curve shifts rightward if a. the price level falls. b. the nominal interest rate increases. the real interest rate increases. O C. O d. the inflation rate increases. O e. real GDP increases.The observed correlation between the price level and real GDP may be low because O consumption is procyclical. O the central bank acts to target the price level. O money demand increases when the nominal interest rate rises. O money demand does not depend on income.Suppose an economy is in long-run equilibrium. The centra bank reduces the money supply by 5 percent. Use your diagram to show what happens to output and the price level as the economy moves from the initial to the new short-run equilibrium. LRAS Aggregate Supply * Aggregate Demand Quantity of Output Aggregate Demand Aggregate Supply Now adjust the graph to show the new long-run equilibrium. What causes the economy to move from its short-run equilibrium to its long-run equilibrium? O Nominal wages, prices, and perceptions adjust upward to this new price level. The government increases spending to increase aggregate demand. The government increases taxes to curb aggregate demand. O Nominal wages, prices, and perceptions adjust downward to this new price level. Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the decrease in th money supply? Check all that apply. Nominal wages at the initial equilibrium are equal to nominal wages at…
- In 2019, The Fed was liquidating their balance sheet (meaning they were selling off the bonds and securities purchased in The Great Recession 2007-2009). That means they are trying to do what in regards to the supply of money. O Increase O Decrease O Create a money stream to increase supply of money O Increase their Capital GainsThe Central Bank prints withdraws money from circulation and burns it. This will cause interest rates to: (Hint: draw a graph for the money market to figure out your answer.) O Stay the same Decrease Increase3)Show and explain the effects of an increase in aggregate demand in the long-run and short-run by using AD–AScurves.2)Show and explain by using a graph, what will happen to the price level and real GDP if the quantity of moneyincreases and the increase is not anticipated; that is, the price level is not expected to change.1)By using aggregate demand (AD) and aggregate supply (AS) curves, show and explain the effects of ananticipated increase in money supply on macroeconomic equilibrium according to Rational ExpectationsHypothesis.
