|
In the long run, the equilibrium interest rate: |
is not affected by changes in the money supply |
|
An increase in the money supply __________ aggregate demand, and the eventual rise in prices leads to a(n) _________ in short-run aggregate supply. |
increases; decrease |
|
An increase in the money supply leads to a(n) __________ in the interest rate in the short run, and a(n) ______ in the interest rate in the long run. |
decrease; no change |
|
In the short run, an increase in the money supply: |
lowers the interest rate, but it does not affect the interest rate in the long run. |
|
n the long run, changes in the money supply: |
do not affect the interest rate. |
|
Suppose that the economy is operating at potential output and there is an increase in the money supply. Which statement best describes the adjustment process that will follow? |
Aggregate output will rise above potential output, nominal wages will rise, and the SRAS will shift leftward. |
|
Contractionary monetary policy leads to ______ in the price level in the short run, and ______ in the price level in the long run. |
a decrease; a decrease |
|
When economists say that money is neutral in the long run, they mean that changes in the money supply: |
do not affect real GDP or its components. |
|
In the long run, an increase in the money supply: |
does not change real GDP. |
|
In the long run, a 50% increase in the money supply: |
increases prices by 50%. |
|
Most major nations have central banks, insulated from political pressure, that typically try to keep inflation in what annual range? |
2-3% |
|
When studying the long-run relationship between money and inflation, which statement is NOT true? |
The concept of "monetary neutrality" was disproved. |
|
A(n) ________ in the money supply lowers the interest rate in the short run, but in the long run, ________ prices lead to a ________ money demand, raising the interest rate to its original level. |
increase; higher; greater |
|
In the long run, the only effect of an increase in the money supply is to ________ the aggregate price level by a(n) ________. |
raise; equal percentage |
|
Which of the following actions by a central bank would an economist consider a productive action? |
Changing the money supply to influence interest rates in the short run. |
|
In the long run, the interest rate is determined in the __________ market. |
loanable funds |
|
If actual output is equal to potential output and the Fed increases the money supply so that actual output exceeds potential output, eventually nominal wages will: |
increase. |
|
The short-run effect of an increase in the money supply is that the aggregate price level: |
increases, and real output also increases. |
|
In the long run, a monetary expansion |
increases the aggregate price level but has no effect on real GDP. |
|
The short-run aggregate supply curve is _____, and the long-run aggregate supply curve is ______. |
upward sloping; vertical |
|
Expansionary monetary policy causes _______ in interest rates in the short run and ______ in interest rates in the long run. |
a fall; no change |
Share This
Flashcard
