If the demand for money depends on the interest rate, then a ________ in the money supply will increase nominal GDP by ________.
A. 5% decrease; more than 5%
B. 5% increase; less than 5%
C. 5% decrease; exactly 5%
D. 5% increase; more than 5%
Answer: B
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The expenditure multiplier in the ISLM framework is smaller than that derived from the simple Keynesian model because
A) velocity is always assumed to be constant. B) the economy is assumed to be in the liquidity trap. C) the aggregate supply curve is assumed to be horizontal. D) the LM curve is assumed to have a positive slope.
The Solo Coal Mine is the only employer in the small town of Way out there. The market supply of coal miners is Qs = 0.02W - 200 and Qd = 500 - 0.02W, where W is the annual wage of a coal miner and Q is the number of coal miners. What is the inverse demand function for coal miners?
A. W = 0.02Q - 500 B. W = 0.02Q + 500 C. W = 25,000 - 50Q D. W = 200Q + 50,000
If natural gas is replaced by solar power as a more efficient form of energy, we should expect _____
a. a leftward shift of the aggregate supply curve b. higher production prices at every output level c. a decline in the growth of total output d. a decrease in the stock of energy-efficient capital goods e. an increase in total factor productivity
Which of the following shifts the long-run aggregate supply curve to the right?
a. both an increase in the capital stock and technological improvements b. an increase in the capital stock but not technological improvements c. an increase in the capital stock but not technological improvements d. neither an increase in the capital stock nor an technological improvements