the federal reserve bank is conducting open market operations and it is more likely to increase money supply during a period when the: -aggregate demand is high, GDP is abote its natural rate and there are signs of economic expansion -aggregate demand is falling, GDP is below its natural rate and there are signs of economic slowdown -unemployment rate is below its natural rate -inflation is on the rise

the federal reserve bank is conducting open market operations and it is more likely to increase money supply during a period when the: -aggregate demand is high, GDP is abote its natural rate and there are signs of economic expansion -aggregate demand is falling, GDP is below its natural rate and there are signs of economic slowdown -unemployment rate is below its natural rate -inflation is on the rise

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 5PA

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In the medium run, if government purchases are increased and nominal money supply is decreased, we can expect that a. the interest rate will increase while aggregate demand and prices may increase, decrease, or remain the same b. aggregate demand and prices will increase but interest rates will not change c. aggregate demand and interest rates will decrease but prices will increase d. aggregate demand, prices, and the interest rate will all decrease e. the AD-curve will shift to the right and the AS-curve will shift to the left
3)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.
What is the effect of a rise in the money wage rate when the economy is at potential GDP? A rise in the money wage rate when the economy is at potential GDP A. does not change potential GDP but increases real GDP along the AS curve. B. decreases potential GDP because the full-employment quantity of labor decreases C. does not change aggregate supply but decreases production D. decreases aggregate supply because a rise in the money wage rate increases costs, so firms employ fewer workers Click to select your answer.
The hypothetical economy represented by the graph is currently experiencing a recession. Suppose the central bank attem to increase the growth rate of the money supply to return the economy to its long-run equilibrium. It is able to move the economy to a new equilibrium but falls short of its goal. Move the aggregate demand curve to demonstrate this scenario. Long-run aggregale supply Short-run aggregate supply Aggregate demand Real GDP growth rate Inflauen rate
Suppose that the Federal Reserve wants to reduce the money supply. Using our model of the money market, investment, and aggregate demand and aggregate supply, explain the how a reduction of the money supply will influence the price level and real GDP, assuming that the economy is operating in the moderate unemployment range of aggregate supply.
Assume the Federal Reserve triples the growth rate of the quantity of money in circulation. In the long run, this increase in money growth will affect which of the following? Check all that apply. PRICE LEVEL Suppose when unemployment is at its natural rate the economy produces a level of real GDP equal to $70 billion. 132 Using the purple points (diamond symbol) plot the economy's long-run aggregate supply (LRAS) curve on the graph. 128 124 120 The price level 116 The quantity of physical capital The level of technological knowledge 108 The inflation rate 10 20 8 50 710 80 8:0 100 LRAS M
Dynamic aggregate demand (AD) can be derived using the quantity theory of money. Label the equation so that it accurately expresses the quantity theory of money in dynamic form growth in the money supply -+ Answer Bank unemployment growth in velocity inflation real economic growth marginal propensity to save Suppose that the velocity of money is stable, 4% real economic growth is occurring, the rate of inflation is 4%, unemployment is 5.3%, and the marginal propensity to save is 3%. By how much is the money supply growing? Enter your answer as a percentage.
PQ 16 According to the New Classical economists, with rational expectations, aan increase in the money supply will a. lead only to an increase in prices in both the short run and the long run b. lea to an increase in the equilibrium level of income in the short run but to no change in the equilibrium level of income in the long run. c. lead to a fall in prices but no change in money wages d. lead to a rightward shift in the long run aggregate supply curve.
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…
Explain how an increase in a price level will affect the demand for money and the aggregate demand. Use relevant graphs to support your answer.
24. Firas a university student, trying to convince his colleague Bilal that the aggregate demand only shifts upward and the main reason is the change in prices: * Firas is almost right since the AD can O shift downwards and the price change is the main factor causing the shift Firas is wrong because the AD can shift both up and down although the prices do not cause a shift in AD Firas is wrong since the AD can shift O both ways and the price can cause the shift. Firas is right since the AD only shifts upwards and the price is the initial factor behind the shift 25. While looking at an economic cycle
Paragraph Styles 3. QUESTION 1 For each of the following statements, show graphically and explain the expected effets of the equilibrium price and output for aggregate demand and aggregate supply, other things remaining constant. a. An appreciation in currency; b. An increase in price of non-labor inputs. c. A decrease in real wage rates. Page 2 of 3