Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 19, Problem 4RQ
To determine
Changes in nominal GDP.
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Students have asked these similar questions
Other things the same, continued increases in the money supply lead to
a. continued increases in the price level and real GDP.
b. continued increases in real GDP but not continued increases in the price level.
c. continued increases in the price level but not continued increases in real GDP.
d. a one-time permanent increase in both prices and real GDP.
a. Explain what happens to Money Demand when each of the following occurs:
i. incomes rise;
ii. the interest rate rises.
b. Use the money market to explain why the aggregate demand curve slopes downward.
Pa...
+
...
Monetarist theorists argue that any positive effect increased government spending might have on the level of income is completely negated by the negative effects such a development has on investment spending.
a. True.
b. False.
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- If the Bank of Canada conducts open-market sales, how do the money supply and the aggregate demand change? a. The money supply increases, and aggregate demand shifts left. b. The money supply decreases, and aggregate demand shifts right. c. The money supply decreases, and aggregate demand shifts left. d. The money supply increases, and aggregate demand shifts right.arrow_forwardInterest rate 3 The graph below illustrates the money demand and investment demand for the economies of Pabst and Kokanee. Pabst Kokanee a. If money supply is increased by 25, what will be the new interest rate? Round your answers to one decimal place. Pabst: % Kokanee: % b. What will be the increase in investment spending as a result of this new interest rate? Pabst: Kokanee: c. If the multiplier is 2 in each economy, what will be the increase in GDP? Pabst: Kokanee: d. In which economy would monetary policy be more effective in closing a recessionary gap? PabstKokanee 3 2 1 10 9 8 MD MS 33 Interest rate 2 1 7 6 (110,1.5) 0 70 80 90 100 110 120 10 20 30 40 50 60 70 80 90 100 Quantity of money Quantity of investment MS MD Kokanee Interest rate 3 10 9 8 2 1 70 90 100 110 120 130 0 Quantity of money 10 20 30 40 50 60 70 80 90 100 Quantity of investmentarrow_forwardWhich is of the following is not a belief of monetarists? a.In the long-run, inflation is always a monetary phenomenon b.In the short-run, Fiscal policy is a better instrument of stabilization policy than monetary policy c.In the short-run, velocity is stable d.In the long-run, a ten percent increase in the money supply results in a ten percent increase in prices Early Keynesian thinks that money is less important because a.High interest elasticity of investment b.People have less incentive to buy bonds c.Fiscal Policy is more effective as it is determined by the politicians d.High interest elasticity of money demand If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be? a.All of these answers b.A decrease in the unemployment rate c.An increase in the level of output d.An increase in the rate of inflation The original Phillips curve…arrow_forward
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- An increase in the interest rate could have been caused by a. a fall in the price level causing the money-demand curve to shift rightward. b. a rise in the price level causing the money-demand curve to shift rightward. c. a fall in the price level causing the money-demand curve to shift leftward. d. a rise in the price level causing the money-demand curve to shift leftward.arrow_forwardA decrease in the money supply causes the interest rate to rise so that investment falls. a. TRUE b. FALSEarrow_forwardWhat is the effect of a rise in the U.S. price level on the buying power of money? The buying power of money _______. A. increases and aggregate demand increases B. increases and the quantity of real GDP demanded increases C. decreases and the quantity of real GDP demanded decreases D. decreases and aggregate demand decreasesarrow_forward
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