Which of the following is a position held by monetarists? O Aggregate demand depends on the money supply and on velocity. The short-run aggregate supply curve is horizontal. The economy is unstable; wages and prices are inflexible. PRICE LEVEL O The velocity of money is constant. Initially, the economy is in long-term equilibrium. Suppose there is decrease in velocity-that is, there is a decrease in the average number of times a dollar is spent to buy goods and services. Show the long-run effect of this change according to the monetarist view, ceteris paribus, by dragging one or both curves on the graph below. REAL GDP SRAS AD 24 AD SRAS

Consider the short run and the long run and then choose the statement that is correct. O A. The real interest rate is independent of the inflation rate in the long run. B. The real interest rate is dependent on the price level in the long run. C. In the short run, money market equilibrium determines the price level. D. In the short run, other things remaining the same, a given percentage change in the quantity of money brings an equal percentage change in the price level.

1st attempt Assume that people in the economy have adaptive expectations. If the inflation rate has been stable at 2% in each prior year (because of passive monetary policies) and the central bank wants to lower unemployment, which policy should it implement? Choose one: O A. a policy that makes the inflation rate less than 2% O B. a policy that makes the inflation rate equal to 2% O C. a policy that makes the inflation rate greater than 2%

What are the immediate effects and the long-run effects if the Fed changes the quantity of money? If the Fed changes the quantity of money, the immediate effects are on and the long-run effects are on O A. the short-term nominal interest rate; the price level and the inflation rate B. the price level; the real interest rate and the inflation rate C. the inflation rate; the long-run nominal interest rate and the real interest rate D. the price level; the inflation rate

and the real money If the inflation rate is higher than the rate of growth of the nominal money supply, the nominal money supply supply (M/P) O a. Stays constant; rises O b. Stays constant; falls O c. Rises; falls O d. Rises; stays constant mo thon

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.

Value of Money O O 2 оо 1 I I I I I IMS₁ D 10 1 I | MS₂ B. D If the money supply is MS2 and the price level is 2, there is excess demand equal to distance AC. Money Demand supply equal to distance AC. demand equal to distance AB. supply equal to distance AB. None of the above is correct. Quantity of Money

Assume, in the 3rd quarter of 2018 in the U.S., the velocity of money was 3.08 and the M2 money supply was $1,050 million. The average prices in the economy was $1.44. Based on this, what was the real GDP of the U.S. in the 3rd quarter of 2018. O a. $2,750 million O b.$1,250 millon Oc. $2,000 million O d. 52.250 million

a) Which of the follwing monetary policy actions can be used to close an inflationary gap?O No change in the money supply to keep interest rates constant.ODecrease the money supply to decrease interest rates,OIncrease the money supply to increase interest rates.O Increase the money supply to decrease interest rates.O Decrease the money supply to increase interest rates.   b) Assume the economy is initially at full-employment equilibrium. Suppose the economy slows down and uncertainty increases, reducing consumption and investment expenditures, in the short run, this shock willcause the economy to fall below full enployment. To move the economy to a full-employment equilibrium, the Fed could:O. decrease government spendingO. increase corporate tax ratesO. lower the federal fund rate targetO. increase government spending O. raise interest rates

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.