In the money market, a condition of excess supply of money can be eliminated by a ________ in aggregate output or a ________ in the interest rate, everything else held constant
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF0. What happens if the real interest rate rises?
A) Nothing; the economy would remain at point a. B) There would be a movement to a point such as b on supply of loanable funds curve SLF0. C) The supply of loanable funds curve would shift rightward to a curve such as SLF2. D) The supply of loanable funds curve would shift leftward to a curve such as SLF1.
A transfer of money from a NOW account to a money market fund causes
a. M1 to fall. b. M2 to rise. c. M3 to rise. d. both M1 to fall and M2 to rise.
A subsidy equal to the marginal private benefit of a good can be used to make a market with a positive externality efficient
a. True b. False