ECON252 Practice Exam_final - Chapters 15-16 (with KEY)

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Unformatted text preview: the long run nor the short run. 5. Which of the following shifts aggregate demand to the left? a. The price level rises. b. The price level falls. c. The dollar depreciates for some reason other than a change in the price level. d. Stock prices fall for some reason other than a change in the price level. 1 Name: ________________________ ID: A Figure 34‐4. On the figure, MS represents money supply 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 of the dollar. In the short run, we would expect a. the price level and real GDP both to rise. b. the price level and real GDP both to fall. c. the price level and real GDP both to stay the same. d. All of the above are possible. 2 Name: ________________________ ID: A 9. Which o...
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