The short-run effect of an increase in the supply of money is
A. an increase in the price level but not in real Gross Domestic Product (GDP).
B. an increase in both real Gross Domestic Product (GDP) and the price level.
C. an increase in the price level, a decrease in real Gross Domestic Product (GDP), but an increase in nominal national income.
D. an increase in real Gross Domestic Product (GDP) but not in the price level.
Answer: B
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If a single union supplies all the labor in a competitive labor market, the union probably will
A. increase labor supply to raise employment. B. restrict labor supply to raise wages. C. increase union membership to increase wages. D. act like a competitive firm.
The transactions motive links money demand and
A) interest rates. B) money supply. C) the liquidity trap. D) income.
Which of the following is true of the equation of exchange?
a. It states that the product of the price level and velocity of money is equal to real GDP. b. It states that aggregate demand in an economy is equal to total investment spending. c. It states that money supply times velocity of money equals real GDP d. It states that velocity of money is equal to the ratio of nominal GDP and money supply. e. It changes to the quantity theory of money if the price level is assumed to be constant.
From 1979 to 1982, the Fed targeted bank reserves as the monetary policy tool. One side effect of this strategy was:
A. the inflation rate increased to over 18 percent in 1983. B. inflation remained high for most of the 1980's. C. many banks failed that otherwise may not have. D. interest rates rose very high.