answers for this multiple questions.( without question 3) 5. If nominal money demand doubles and the real money supply also doubles, whathappens to the price level?A). The price level increases by a factor of four.B). The price level doubles,C). The price level is unchanged.D). The price level falls by one-half.6. Suppose a one-year discount bond offers to pay $1000 in one year and currently hasa 15% interest rate. Given this information, we know that the bond's price must beA) $869.56.B) $1150.C) $850.D) S950.E) none of the above27. The money supply will tend to fall when which of the following occurs?A) a central bank sale of bondsB) a decrease in the ratio of reserves to depositsC) a shift in public preferences away from currency to checkable depositsD) all of the aboveE) none of the above8. An increase in the reserve ratio, 0, will causeA) an increase in the monetary base (H).B) a reduction in H.C) an increase in the money multiplier.D) a reduction in the money multiplier.E) none of the above9. An increase in the parameter c, the proportion of money individuals wish to holdas currency, will tend to cause which of the following?A) an increase in the monetary base (H)B) a reduction in HC) an increase in the money multiplierD) a reduction in the money multiplier10. If individuals do not hold checkable deposits, we know thatA) money supply (M) = the amount of currency (CU ).B) the monetary base (H) = the amount of currency (CU ).C) the money multiplier is 1.D) all of the above11. Which of the following will shift the LM curve down?A). Real income increases.B). Real income decreases.C). Wealth increasesD). money supply increases. 1. The definition of GDP deflator isIt implies thatreal GDPA. GDP deflator =it implies that the rate of inflation is equal to theno min al GDPgrowth rate of real GDP plus the growth rate of nominal GDP.real GDPB. GDP deflator =it implies that the rate of inflation is equal to theno min al GDP'growth rate of real GDP minus the growth rate of nominal GDP.no min al GDPC. GDP deflator =it implies that the rate of inflation is equal to thereal GDPgrowth rate of nominal GDP plus the growth rate of real GDP.no min al GDPD. GDP deflator =it implies that the rate of inflation is equal to thereal GDPgrowth rate of nominal GDP minus the growth rate of real GDP.2. If C=2000+0.9x(Y –T), what decrease in taxes must occur for equilibriumoutput to increase by 1000?A) 111B) 100C) 1000D) 5003. Based on our understanding of the paradox of saving in Chapter 3, we know that areduction in the desire to save will causeA) an increase in equilibrium GDP.B) a reduction in GDP.C) an increase in the desire to invest.D) no change in equilibrium GDP.E) a permanent reduction in the level of saving.4. Which of the following will cause the money multiplier to become larger?A). an increase in high powered money.B). an increase in the public's preferences for checking deposits as opposed toholding currency.C). a decrease in the discount rateD). a decrease in the interest rate paid on reserves

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