Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run
A. real GDP will be Y1, and the price level will be P1.
B. real GDP will be between Y1 and Y2, and the price level will be above P1.
C. real GDP will be Y1, and the price level will be below P2.
D. real GDP will be Y2, and the price level will be P2.
Answer: C
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If the price elasticity of demand for a good is greater than one, then the demand for that good is:
A. unit elastic. B. perfectly elastic. C. inelastic. D. elastic.
Refer to the figure below. The equilibrium price is ________, and the equilibrium quantity is ________. 
A. $30; 15 B. $35; 20 C. $25; 5 D. $25; 20
The Marshall-Lerner Condition states that, all else equal
A) nominal appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate. B) real depreciation improves the current account if export and import volumes are sufficiently inelastic with respect to the real exchange rate. C) real appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate. D) real depreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate. E) the sum of import and export elasticities must be equal to one in order for depreciation to occur.
The decline in net worth that can result from an unanticipated decline in the price level is known as ________
A) a credit boom B) deleveraging C) a debt deflation D) federal funds rationing