When the economy is hit by a temporary negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy, then in the long run
A) inflation will be lower.
B) output will be at its potential.
C) output will be lower.
D) inflation will be unchanged.
E) both B and D.
E
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Economics is best defined as the science of choice and how people cope with
A) differences in wants. B) differences in needs. C) scarcity. D) different economic systems.
If an individual moves money from a money market deposit account to currency
A) M1 increases and M2 stays the same. B) M1 stays the same and M2 increases. C) M1 stays the same and M2 stays the same. D) M1 increases and M2 decreases.
Make use of the quantity equation to answer the following problem. If the Fed increases the money supply by 4%, velocity increases by 1%, and economic growth is 3%, by how much will the price level increase?
What will be an ideal response?
If the government intervenes in the market, while the market meets the efficiency conditions, then the government:
A. promotes more efficiency. B. causes inefficiency. C. reduces the consumer surplus only. D. reduces the producer surplus only.