Exhibit 17-3 Aggregate demand and aggregate supply curves
As shown in Exhibit 17-3, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause the price level to move:
A. from 100 to 110 initially and then eventually move back to 100.
B. directly from 100 to 110 and then remain at 110.
C. directly from 100 to 120 and then remain at 120.
D. from 100 to 110 initially and then eventually move to 120.
Answer: D
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A) positive, upward B) positive, downward C) negative, upward D) negative, downward
When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis, an increase in the interest rate
A. decreases the quantity demanded of money. B. does none of these answers. C. increases the quantity demanded of money. D. increases the demand for money. E. decreases the demand for money.
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A. stocks. B. factories. C. gold. D. bonds.
Article 126 of the Treaty on the functioning of the European Union stated that the member nations had to maintain a deficit to GDP ratio of
A. less than 3 percent. B. equal to 3 percent. C. higher than 5 percent. D. equal to 4 percent.