Suppose that the money supply increases by 20 percent. If there is no inflation, what does the quantity theory of money tell us must happen to real GDP?It must increase by more than 20 percent.It must increase by less than 20 percent.It must increase by exactly 20 percent.None of the above are correct. Which of the following statements is true of the federal funds market?No banks are refused loans in the federal funds market.In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lend them out.The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability.Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks. On a graph with real GDP growth on the x-axis and the unemployment rate on the y-axis, you plot each year's values for the United States as a separate point. What does the overall trend in this graph look like?An upward-sloping lineA vertical lineA horizontal lineA downward-sloping line Several people in Neonland are expecting a sharp rise in the unemployment rate in the near future. Which of the following is likely to happen in this case?The labor demand curves of firms in Neonland will shift rightward.Current consumption by households in Neonland will increase.Investment by firms in Neonland will increase.Neonland's GDP will fall. A firm's ________ when its inventory increases.labor demand curve is likely to shift to the rightlabor demand curve is likely to shift to the lefttotal product curve is likely to shift upwardcost curve is likely to shift downward The ultimate goal of an expansionary monetary policy is to ________.lower short-term interest rateslower long-term interest ratesshift the labor demand curve to the rightshift the labor demand curve to the left Which of the following is likely to happen because of quantitative easing by the Fed?A rightward shift of the demand curve for bank reservesA leftward shift of the demand curve for bank reservesA rightward shift of the supply curve of bank reservesA leftward shift of the supply curve of bank reserves

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Answered: Suppose that the money supply increases…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the money supply increases by 20 percent. If there is no inflation, what does the quantity theory of money tell us must happen to real GDP?

It must increase by more than 20 percent.
It must increase by less than 20 percent.
It must increase by exactly 20 percent.
None of the above are correct.

Which of the following statements is true of the federal funds market?

No banks are refused loans in the federal funds market.
In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lend them out.
The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability.
Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks.

On a graph with real GDP growth on the x-axis and the unemployment rate on the y-axis, you plot each year's values for the United States as a separate point. What does the overall trend in this graph look like?

An upward-sloping line
A vertical line
A horizontal line
A downward-sloping line

Several people in Neonland are expecting a sharp rise in the unemployment rate in the near future. Which of the following is likely to happen in this case?

The labor demand curves of firms in Neonland will shift rightward.
Current consumption by households in Neonland will increase.
Investment by firms in Neonland will increase.
Neonland's GDP will fall.

A firm's ________ when its inventory increases.

labor demand curve is likely to shift to the right
labor demand curve is likely to shift to the left
total product curve is likely to shift upward
cost curve is likely to shift downward

The ultimate goal of an expansionary monetary policy is to ________.

lower short-term interest rates
lower long-term interest rates
shift the labor demand curve to the right
shift the labor demand curve to the left

Which of the following is likely to happen because of quantitative easing by the Fed?

A rightward shift of the demand curve for bank reserves
A leftward shift of the demand curve for bank reserves
A rightward shift of the supply curve of bank reserves
A leftward shift of the supply curve of bank reserves

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