Since classical economists and monetarists believe that the economy operates at full employment, real GDP, that is, along the vertical segment of aggregate supply:
a. any increase in the money supply can only end up raising the price level.
b. any increase in the money supply can only end up lowering the price level.
c. any decrease in the money supply can only end up raising the price level.
d. changes in the money supply will not affect the price level.
e. any increase in the money supply will cause both nominal and real GDP to increase.
a
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An increase in aggregate demand will shift the short-run Phillips curve to the right.
Answer the following statement true (T) or false (F)
When a firm is experiencing decreasing marginal costs, it implies
a. There are diminishing marginal productivity b. There are increasing average costs c. There are constant marginal productivity d. There are increasing marginal productivity
Which of the following is correct with regard to the supply of money?
a. The money supply is inversely related to the interest rate. b. The money supply is independent of the interest rate. c. The money supply is positively related to the interest rate with a relatively flat slope. d. The money supply curve is horizontal. e. The money supply is positively related to the interest rate with a relatively steep slope.
(I) Governments that respect property rights and freedom of exchange while following monetary (and fiscal) policies consistent with relative price stability, establish the foundation for economic growth. (II) Governments have often diminished the economic prospects of a nation by levying high taxes, instituting price controls, and following inflationary monetary policies
a. I is true; II is false. b. I is false; II is true. c. Both I and II are true. d. Both I and II are false.