In the long run, a decrease in the money supply will affect the price level and the level of output in which of the
following ways?
(A)Price Level = Increase ; Output = Increase
(B)Price Level = Increase ; Output = No change
(C)Price Level = Decrease ; Output = Increase
(D)Price Level = Decrease ; Output = Decrease
(E)Price Level = Decrease ; Output = No change
A contraction in the money supply will most likely change the nominal interest rate and aggregate demand in which of
the following ways in the short-run?
(A)Nominal Interest Rate = Increase ; Aggregate Demand = Decrease
(B)Nominal Interest Rate = Increase ; Aggregate Demand = Increase
(C)Nominal Interest Rate = Increase ; Aggregate Demand = Not change
(D)Nominal Interest Rate = Decrease ; Aggregate Demand = Decrease
(E)Nominal Interest Rate = Decrease ; Aggregate Demand = Increase
The graph above shows two aggregate demand curves, AD1 and AD2, and an aggregate supply curve, AS. The shift in the
aggregate demand curve from AD1 to AD2 could be caused by
(A)a decrease in taxes
(B)a decrease in the money supply
(C)an increase in government spending
(D)an increase in consumption spending
(E)an increase in the price level
In the long run, an increase in aggregate demand due to an expansion in the money supply will increase
(A)price level and real output
(B)nominal output and real output
(C)nominal output but not the price level
(D)nominal output and the price level
(E)real output but not the price level
With an upward-sloping aggregate supply curve, an increase in the money supply will affect the price level and real gross
domestic product (GDP) in the short-run in which of the following ways?
(A)Price Level = Decrease ; Real GDP = Decrease
(B)Price Level = Decrease ; Real GDP = Increase
(C)Price Level = Increase ; Real GDP = Decrease
(D)Price Level = Increase ; Real GDP = Increase
(E)Price Level = No change ; Real GDP = No change
The aggregate demand curve is downward sloping because an increase in the general price level will cause the demand
for money, interest rates, and investment to change in which of the following ways?
(A)Demand for Money = Increase ; Interest Rates = Increase ; Investment = Increase
(B)Demand for Money = Increase ; Interest Rates = Increase ; Investment = Decrease
(C)Demand for Money = Increase ; Interest Rates = Decrease ; Investment = Increase
(D)Demand for Money = Decrease ; Interest Rates = Increase ; Investment = Decrease
(E)Demand for Money = Decrease ; Interest Rates = Decrease ; Investment = Increase
In the short-run, an expansionary monetary policy would most likely result in which of the following changes in the price
level and real gross domestic product (GDP)?
(A)Price Level = Decrease ; Real GDP = Increase
(B)Price Level = No change ; Real GDP = Decrease
(C)Price Level = Increase ; Real GDP = No change
(D)Price Level = Increase ; Real GDP = Decrease
(E)Price Level = Increase ; Real GDP = Increase