Other things equal, an adverse supply shock would
a. Lower the price level
b. decrease real output
c. Shift AD left
d. Do a. and b. but not c.
b
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The Fed directly controls long-term interest rates
Indicate whether the statement is true or false
If a country's currency appreciates, then its exports will cost ________ abroad and its imports will cost ________ domestically
A) less; less B) less; more C) more; less D) more; more
Suppose the required reserve ratio is 0.2, and the Fed buys $5,000 of U.S. government securities from Bank A, which lends $4,000 and keeps $1,000 in its vault as cash. In this round of the money-creation process, the M1 money supply has increased by: a. $1,000
b. $4,000. c. $5,000. d. $10,000. e. $3,000.
Use the following balance sheet for the First Federal Bank to answer the next question.AssetsLiabilities + Net WorthReserves$100,000Checkable deposits$300,000Loans140,000Stock shares200,000Securities60,000 Property200,000 If the reserve requirement is 20%, this bank can safely expand its loans by a maximum of
A. $20,000. B. $100,000. C. $200,000. D. $40,000.