Macroeconomics. True/False Questions. Please answer all questions and give brief explanation. The short-run nominal interest rate decreases and the long-run nominal interest rate increases when the central bank increases money supply.

Macroeconomics. True/False Questions. Please answer all questions and give brief explanation.

1. The short-run nominal interest rate decreases and the long-run nominal interest rate increases when the central bank increases money supply.

2. The tax multiplier is larger than the government spending multiplier.

3. According to the Pigou effect, a decrease in price leads to an increase in output.

4. Under a small open economy model with floating exchange rates, an increase in money supply leads to an increase in investment and output.

5. In theory, an increase in country risk premium leads to a decrease in investment and output.

6. Under the closed economy model, if money demand does not depend on the interest rate, the LM curve is vertical.

7. The (negative) tradeoff between inflation and unemployment holds only in the short run.

8. According to the life cycle model, population aging (the fraction of the population that is elderly increases) leads to a decrease in national saving.

9. According to Tobin’s q, a decrease in stock price leads to a decrease in investment and output.

10. An increase in the real interest rate increases the inventory investment.