In the short run, which of the following is the most likely effect of an unanticipated move to expansionary monetary policy?
a. an increase in real output
b. a decrease in real output
c. an improvement in technology, which will stimulate growth in the long run
d. an increase in prices proportional to the increase in the money supply
A
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Refer to Figure 15-10. In the figure above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve?
A) an open market sale of Treasury bills B) an open market purchase of Treasury bills C) an increase in income taxes D) a decrease in the required reserve ratio
Switzerland has experienced the lowest rate of price increases in the post World War II period. Consequently, Lucas would predict
A) small supply responses to variations in the inflation rate. B) large supply responses to variations in the inflation rate. C) small demand responses to variations in the inflation rate. D) large demand responses to variations in the inflation rate.
If the economy is at full employment, anything that causes the level of income to change will cause fluctuations in the __________ that will shift the __________ curve and thus help stabilize economic activity
A) price level; IS B) price level; LM C) interest rate; IS D) interest rate; LM
The contribution of an additional worker to a firm's ____, is the worker's contribution to revenue minus the worker's ____
a. profits; wage b. output; wage c. profits; marginal productivity d. output; marginal productivity