Homework Answers
Answer
Option 2
the increase in the money supply increases the consumption and the
investments which increase the AD and shifts the AD curve to the
right.
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Inter est rate (percent) S1 S2 r1 Di Quantity of money per period What happens in...
As prices rise, a fixed money supply will be able to buy fewer goods and services....
As prices rise, a fixed money supply will be able to buy fewer goods and services. This real balance effect is due to a(n) reduction in the interest rate. Increase in aggregate demand Decline in the purchasing power of the fixed quantity of money. Increase in income. The international substitution effect exists because a Higher price level will reduce interest rates and stimulate foreign investment. Lower price level will make domestically produced goods less expensive relative to foreign goods. Higher...
If at some specific interest rate the quantity of money demanded is less than the quantity...
If at some specific interest rate the quantity of money demanded is less than the quantity of money supplied, people will desire to buy interest-earning assets causing the interest rate to decrease. Select one: True False In recent years, the Fed has conducted policy by setting a target for the federal funds rate. Select one: True False A decrease in taxes is an expansionary fiscal policy designed to increase aggregate demand and reduce unemployment. Select one: True False If aggregate...
17- Both the long run and short run aggregate supply curve will shift when an event...
17- Both the long run and short run aggregate supply curve will shift when an event occurs which is expected to last only a short period of time. they are both upward sloping. a war occurs in the Middle East. the endowments of the factors of production changes 19- Cost-push inflation occurs when the aggregate supply curve shifts to the right, while aggregate demand remains stable. when the aggregate demand curve shifts to the left, while aggregate supply remains stable....
1. A decrease in interest rates will ___ the cost of acquiring funds for investment projects,...
1. A decrease in interest rates will ___ the cost of acquiring funds for investment projects, other things equal. -Increase -Have an indeterminate effect on -Not change -Decrease 2. The IS curve -Shows combinations of interest rates and output levels where the goods market is in equilibrium -Is upward sloping because higher interest rates increase aggregate demand -Was created by the CIA in the 1960s as anti-Soviet propaganda -Shifts if the money supply changes 3. If firms invent new technologies,...
Question 1 1 pts If an economist needs to use a model that collectively reflects the...
Question 1 1 pts If an economist needs to use a model that collectively reflects the interconnections and the entire market supply and demand relationships, which model is the best to use? The general equilibrium model. The cyclical unemployment model. The AD-AS model During the winter of 2014/2015 oil prices dropped by a large percentage compared to the summer of 2014 By March 2015, what changed? There was a shift to the left in the aggregate demand curve. There was...
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In...
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. The price level The inflation rate The quantity of physical capital The size of the labor force Suppose the economy produces real GDP of $70 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply...
Which of the following will most likely cause a decrease in short-run aggregate supply (leftward shift) in the goods and services market?
35. Which of the following will most likely cause a decrease in short-run aggregate supply (leftward shift) in the goods and services market? a. An increase in the productivity of labor b. A reduction in the price of crude oil, a major imported commodity c. An increase in resource prices d. Favorable weather conditions in agricultural areas. 36. The vertical long-run aggregate supply curve reflects the fact that in the long run, an increase in the price level. a. Will not alter the economy's maximum...
3)If the price level rises and the money wage-rate remains constant, what happens to the quantity...
3)If the price level rises and the money wage-rate remains constant, what happens to the quantity of real GDP supplied? Along which aggregate supply curve does the economy move? (Detail Answer)
Suppose the Fed doubles the growth rate of the quantity of money in the economy
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. The size of the labor force The inflation rate The price level The level of technological knowledge Suppose the economy produces real GDP of $30 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. Suppose the...
9. Applying the extended AD-AS model Financial crises, such as the one that impacted many developed...
9. Applying the extended AD-AS model
Financial crises, such as the one that impacted many developed
countries starting in 2007, decrease banks’ ability and willingness
to make loans. Decreased availability of credit decreases
businesses’ ability to make investment purchases and consumers’
ability to buy goods and services. As a result, a financial crisis
is a negative shock for an economy.
The following graph shows an economy’s aggregate demand curve
and its short-run and long-run aggregate supply curves after a
financial...
Question 1 1 pts If an economist needs to use a model that collectively reflects the interconnections and the entire market supply and demand relationships, which model is the best to use? The general equilibrium model. The cyclical unemployment model. The AD-AS model During the winter of 2014/2015 oil prices dropped by a large percentage compared to the summer of 2014 By March 2015, what changed? There was a shift to the left in the aggregate demand curve. There was...
9. Applying the extended AD-AS model
Financial crises, such as the one that impacted many developed
countries starting in 2007, decrease banks’ ability and willingness
to make loans. Decreased availability of credit decreases
businesses’ ability to make investment purchases and consumers’
ability to buy goods and services. As a result, a financial crisis
is a negative shock for an economy.
The following graph shows an economy’s aggregate demand curve
and its short-run and long-run aggregate supply curves after a
financial...
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