A decrease in the supply of money will, according to the quantity theory of money, lead to
A. a lower real Gross Domestic Product (GDP).
B. a higher price level.
C. a higher nominal Gross Domestic Product (GDP).
D. a lower price level.
Answer: D
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The Argentine banking crisis of 2001 resulted from Argentina's banks being required to
A) purchase large amounts of government debt. B) pay back the value of failed loans. C) make risky real estate loans. D) make loans to only state-owned businesses.
The money multiplier is equal to: a. the value of the required reserve ratio of the economy
b. one-hundredth of the required reserves of the economy. c. the reciprocal of the required reserve ratio of the economy. d. one-hundredth of the required reserve ratio of the economy.
An effort by the Fed to reduce aggregate demand may be thwarted because
A) investment could remain the same or increase because of optimistic expectations by businesses about the future of the economy. B) investment and interest rates are positively related. C) investment could fall because of pessimistic expectations. D) taxes may have been increased.
At levels of output close to full employment, the aggregate supply curve is probably
A. very flat. B. very steep. C. sloped downward. D. perfectly elastic.