Suppose the economy is initially in long-run equilibrium. The Fed decides to increase the required reserve ratio. In the short-run, this contractionary monetary policy will cause: O A. A shift from SRAS₂ to SRAS, and a movement to point B, with a lower price level and higher output. O B. A shift from AD₁ to AD₂ and a movement to point B, with a higher price level and higher output. OC. A shift from SRAS, to SRAS₂ and a movement to point A, with a higher price level and the same output. OD. A shift from AD₂ to AD₁ and a movement to point D, with a lower price level and lower output. 122- 120- 118- 116- 114- 112- 110- 108- 106- 104- 102- 100- 98- 96- 94- 92- 90- 0 Price Level D LRAS B 2 4 ढ 10 12 Real GDP (trillions of 2000 dollars) SRAS₂ SRAS₁ AD2 AD1 14 16

Suppose the economy is initially in long-run equilibrium. The Fed decides to increase the required reserve ratio. In the short-run, this contractionary monetary policy will cause: O A. A shift from SRAS₂ to SRAS, and a movement to point B, with a lower price level and higher output. O B. A shift from AD₁ to AD₂ and a movement to point B, with a higher price level and higher output. OC. A shift from SRAS, to SRAS₂ and a movement to point A, with a higher price level and the same output. OD. A shift from AD₂ to AD₁ and a movement to point D, with a lower price level and lower output. 122- 120- 118- 116- 114- 112- 110- 108- 106- 104- 102- 100- 98- 96- 94- 92- 90- 0 Price Level D LRAS B 2 4 ढ 10 12 Real GDP (trillions of 2000 dollars) SRAS₂ SRAS₁ AD2 AD1 14 16

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 a customer makes a $2,280 cash withdrawal from Bank A. If the reserve requirement was total decrease in the money supply in the 6 percent, the deposit would ultimately lead to a economy, if all banks in the system lend out 100 percent of their excess reserves. O $2,143.20 O $2,280 O $28,500 O $35,720 $38,000
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Answer the following question in the image
True or False: An open-market purchase reduces the size of the monetary base and reduces the size of the money supply by even more. O True O False
With the inflation rate on the vertical axis and output on the horizontal axis, the long run aggregate supply curve O a. Is horizontal because of money illusion O b. Is upward-sloping because a higher inflation rate implies higher profits for the firms O c Is upward-sloping because of money illusion O d. Is vertical because Yp is independent of the inflation rate
Please answer fast
2. Suppose that the money market can be depicted in the graph below. Interest rate (M/P)² (M³/P)⁰ (M³/P)1 H A K O B C O E L3 L1 L2 Quantity of Money LI is the original demand for money by the public and (M/P) is the real money supply. Assume tha the price level does not change. The original equilibrium is at point O. Suppose that the government lowered income taxes so that consumers had more disposable income. Briefly describe how you reached that conclusion. Identify the new equilibrium point and what happens to interest rates
Suppose you read in the Wall Street Journal that the Fed was "increasing its target interest rate." It follows that the rate in question is the and one way in which Fed could achieve its new, higher target rate is by Select one: O a. Federal Funds Rate; conducting an open market sale O b. Federal Funds Rate; conducting an open market purchase O c. Prime Rate; conducting an open market sale d. Prime Rate; conducting an open market purchase
2. Create the T-entry for the Fed that goes together with the choice in the question above
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If the Fed is pursuing a fixed interest rate target, an increase in the money supply will be required when Select one: O a. money demand increases. O b. GDP decreases. c. M2 increases relative to M1, because the transaction cost of transferring money from savings accounts to checking accounts declines. O d. money demand decreases.
In the short run, what would be the result of an increase in the monetary base? Assume the reserve ratio is unchanged. O a. Demand for money decreases. Ob. Demand for money increases. O c. Quantity demanded of money decreases. O d. Price level decreases. O e. Nominal interest rate falls.