ECON252_Practice_Exam_3A_-_Chapters_15-16_with_KEY_

Anincreaseinthepricelevel d

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Unformatted text preview: upply and MD represents money demand. 6. Refer to Figure 34‐4. Which of the following events could explain a decrease in the equilibrium interest rate from r3 to r1? a. a decrease in the price level b. a decrease in the number of firms building new factories and buying new equipment c. an increase in the price level d. an increase in the number of firms building new factories and buying new equipment 7. Refer to Figure 34‐4. Which of the following events could explain a shift of the money‐demand curve from MD1 to MD2? a. a decrease in the price level b. a decrease in the cost of borrowing c. an increase in the price level d. an increase in the cost of borrowing 8. Suppose the economy is in long‐run equilibrium. In a short span of time, there is a decline in the money supply, a tax increase, a pessimistic revision of expectations about future business conditions, and a rise in the value o...
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This test prep was uploaded on 02/19/2014 for the course ECON 252 taught by Professor Robertholand during the Fall '08 term at Purdue University-West Lafayette.

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