In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing faster than potential real GDP?
What will be an ideal response?
Aggregate demand increasing faster than potential real GDP results in inflation.
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Markets provide
A) information. B) prices. C) incentives. D) all of these choices.
Most changes in the money supply are the consequence of a change in the required reserve ratio
a. True b. False
A shift in supply means a change in the quantity supplied at _______ price(s).
a. low b. high c. no d. every
Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate supply shifts left, the central bank must
a. decrease the money supply, which will move output back towards its long-run level. b. decrease the money supply, which will move output farther from its long-run level. c. increase the money supply, which will move output back towards its long-run level. d. increase the money supply, which will move output farther from its long-run level.