In response to an adverse supply shock, suppose the Fed implements accommodating monetary policy. Which of the following occurs as a result of the accommodating monetary policy?
a. Aggregate demand shifts to the left, which increases inflation and increases unemployment in the short run.
b. Aggregate demand shifts to the left, which decreases inflation and increases unemployment in the short run.
c. Aggregate demand shifts to the right, which increases inflation and increases unemployment in the short run.
d. Aggregate demand shifts to the right, which increases inflation and decreases unemployment in the short run.
d
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A demand schedule shows
A. the “market potential” for a product. B. how much consumers are willing and able to buy at different prices. C. possible combinations of output under different conditions. D. how much producers would like to sell at different prices. E. All of these responses are correct.
The consumption function shows how much
A) households plan to consume per year at each possible interest rate. B) real disposable income people will earn at each income tax bracket. C) households plan to consume per year at each level of real disposable income. D) households plan to consume per year at each level of savings.
In the Mundell-Fleming model, the exogenous variables are
a. government spending, taxes, and income. b. the exchange rate and the price level. c. the price level, the world interest rate, monetary policy, and fiscal policy. d. the world interest rate, the price level, and the exchange rate. e. none of the above.
The demand for a resource rises as
A. its productivity rises and the relative prices of substitutable resources rises. B. its productivity rises and the prices of substitutable resources falls. C. its productivity falls and the relative prices of substitutable resources falls. D. its productivity falls and prices of substitutable resources falls.