In the medium run, if government purchases are increased and nominal money supply is decreased, we can expect that   a. the interest rate will increase while aggregate demand and prices may increase, decrease, or remain the same   b. aggregate demand and prices will increase but interest rates will not change   c. aggregate demand and interest rates will decrease but prices will increase   d. aggregate demand, prices, and the interest rate will all decrease   e. the AD-curve will shift to the right and the AS-curve will shift to the left

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter10: Dynamic Change, Economic Fluctuations, And The Ad-as Model
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In the medium run, if government purchases are increased and nominal money supply is decreased, we can expect that

 

a. the interest rate will increase while aggregate demand and prices may increase, decrease, or remain the same

 

b. aggregate demand and prices will increase but interest rates will not change

 

c. aggregate demand and interest rates will decrease but prices will increase

 

d. aggregate demand, prices, and the interest rate will all decrease

 

e. the AD-curve will shift to the right and the AS-curve will shift to the left

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