Explain how a change in the money supply can affect the following in the short run: a. The supply of loanable funds b. Real GDP c. The price level d. The expected inflation rate
a. As the Fed increases the money supply (for example, with an open market purchase) reserves in the banking system rise, giving banks the ability to extend more loans. Therefore, the supply of loans rises.
a. As the money supply increases, the AD curve shifts rightward and Real GDP rises in the short run.
b. As the money supply increases, the AD curve shifts rightward and the price level rises in the short run.
c. Given that an increase in the money supply leads to a rising price level, it is reasonable to assume that the expected inflation rate would rise, as well.
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Which of the following is an example of a supply shock?
A) a surprise increase of the money supply B) an increase in the price level C) a sharp increase in the price of oil D) an increase in government spending
The existence of rating agencies has
A) lowered returns on corporate bonds. B) raised returns on corporate bonds. C) left returns on corporate bonds largely unaffected. D) raised returns on both corporate bonds and Treasury securities.
For the Cobb-Douglas production function F(L,K) = AL?K?, a technical change that increases the productivity of capital would be represented by:
A. an increase in the value of ?. B. an increase in the value of ?. C. values of ? and ? for which ? > ?. D. an increase in the value of A.
Consumer surplus is given by the area:
a. above the supply curve but below the price b. below the supply curve c. below the demand curve but above the price d. below the demand curve e. none of the above