Suppose the money supply is $4 trillion; nominal GDP is $16 trillion; and real GDP is $12 trillion. Ceteris paribus, it follows that the price level is and the velocity is Select one: O a. 1.33 ; 4 O b. 3; 4 O c. 1.33; 3

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

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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. OB. A shift from AD₁ to AD₂ and a movement to point B, with a higher price level and higher output. O C. A shift from SRAS, to SRAS₂ and a movement to point A, with a higher price level and the same output. O D. A shift from AD₂ to AD, 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- -O 0 Price Level LRAS B 4 6 8 10 12 Real GDP (trillions of 2000 dollars) SRAS₂ SRAS₁ AD2 AD1 14 16

Using the simply multiple deposit multiplier model, the Federal Reserve Bank desires to increase the size of checkable deposits by $50,500. If the required reserve ratio is 5%, then the Fed needs to purchase worth of securities in the open market. O $2,445 O $2,650 O $2,525 O $2,500

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The quantity theory of money begins with the equation of exchange, MV = PY, and then adds the assumptions that Select one: A. velocity and potential GDP are independent of the quantity of money. B. potential GDP and the price level are independent of the quantity of money. C. velocity and the price level are independent of the quantity of money. D. potential GDP and the quantity of money are independent of the price level. O E. velocity varies inversely with the interest rate, and the price level is independent of the quantity of money.

None

Suppose the central bank is using monetary policy in an attempt to hold real GDP permanently above potential GDP. With this policy decision, O a. Inflation is not a problem, but unemployment is. O b. Inflation will accelerate over time. O c. Inflation can be kept at a low, constant rate. O d. The central bank will fail to achieve its goal. O e. The AD curve will shift leftward to cure the inflation problem.

sters 13,14,15,16 ss2023 Price Level FI Multiple Choice Figure 15.6 (Figure 15.6) Which of the following Fed actions is most likely to decrease the aggregate demand curve from AD2 to AD₁? O O 2 S W Real Output decreasing the reserve requirement lowering the discount rate F2 buying bonds in the open market H Q Search. *m AS AD₂ AD₁ # 3 A E D 4) $ 4 R F Pll 45 % FS T G PrtScn J F8 * 8 Home 1 M F9 ( 9 K End F10 O ) PgUp 0 L F11 P dtv Help PgDn F12 { Seve & Em 1 + =