Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 19, Problem 4RQ
To determine
Changes in nominal GDP.
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Students have asked these similar questions
a. Explain what happens to Money Demand when each of the following occurs:
i. incomes rise;
ii. the interest rate rises.
b. Use the money market to explain why the aggregate demand curve slopes downward.
Pa...
+
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Other things the same, continued increases in the money supply lead to
a. continued increases in the price level and real GDP.
b. continued increases in real GDP but not continued increases in the price level.
c. continued increases in the price level but not continued increases in real GDP.
d. a one-time permanent increase in both prices and real GDP.
If the Bank of Canada conducts open-market sales, how do the money supply and the aggregate demand change?
a. The money supply increases, and aggregate demand shifts left.
b. The money supply decreases, and aggregate demand shifts right.
c. The money supply decreases, and aggregate demand shifts left.
d. The money supply increases, and aggregate demand shifts right.
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Similar questions
- In the Keynesian theory, money wages do not fall response to a decrease in aggregate demand . a. true b. falsearrow_forwardMonetarist theorists argue that any positive effect increased government spending might have on the level of income is completely negated by the negative effects such a development has on investment spending. a. True. b. False.arrow_forwardIn order to combat inflation, the Fed will ________ the federal funds rate thereby ________ the quantity of money. a. raise; increase b. lower; increase c. raise; decrease d. lower; decreasearrow_forward
- Suppose that the money supply increases by 20 percent. If there is no inflation, what does the quantity theory of money tell us must happen to real GDP? (Assume that the velocity of money is constant.) Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a It must increase by more than 20% It must increase by less than 20% C It stays the same d. It must increase by 20%arrow_forwardIf the unemployment rate falls below its long-run level, which policies would be appropriate to stabilize output? a. increase the money supply, increase taxes b. increase the money supply, cut taxes c. decrease the money supply, increase taxes d. decrease the money supply, cut taxesarrow_forwardWhich is of the following is not a belief of monetarists? a.In the long-run, inflation is always a monetary phenomenon b.In the short-run, Fiscal policy is a better instrument of stabilization policy than monetary policy c.In the short-run, velocity is stable d.In the long-run, a ten percent increase in the money supply results in a ten percent increase in prices Early Keynesian thinks that money is less important because a.High interest elasticity of investment b.People have less incentive to buy bonds c.Fiscal Policy is more effective as it is determined by the politicians d.High interest elasticity of money demand If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be? a.All of these answers b.A decrease in the unemployment rate c.An increase in the level of output d.An increase in the rate of inflation The original Phillips curve…arrow_forward
- Please help solvearrow_forwardIn the above figure, suppose that the economy has moved from point Dto point B.According to the monetarist theory of the business cycle, what could have caused this movement? Select one: O a.a decrease in the money wage rate b. an increase in the money wage rate c. an increase in the growth rate of the quantity of money O d. an increase in uncertainty about future sales and profitsarrow_forwardimage attachedarrow_forward
- An increase in the interest rate could have been caused by a. a fall in the price level causing the money-demand curve to shift rightward. b. a rise in the price level causing the money-demand curve to shift rightward. c. a fall in the price level causing the money-demand curve to shift leftward. d. a rise in the price level causing the money-demand curve to shift leftward.arrow_forwardWhat is the effect of a rise in the U.S. price level on the buying power of money? The buying power of money _______. A. increases and aggregate demand increases B. increases and the quantity of real GDP demanded increases C. decreases and the quantity of real GDP demanded decreases D. decreases and aggregate demand decreasesarrow_forwardAggregate demand shifts right if at a given price level a. taxes rise and shifts left if the money supply increases. b. taxes rise and shifts right if the money supply increases. c. taxes fall and shifts left if the money supply increases. d. taxes fall and shifts right if the money supply increases.arrow_forward
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