An increase in money supply causes the real interest

This preview shows page 9 - 11 out of 16 pages.

40. An increase in money supply causes the real interest rate to _____ and the price level to _____ in general equilibrium. (a) rise; rise (b) remain unchanged; fall (c) remain unchanged; rise (d) fall; fall Answer: C Level of difficulty: 2 Section: 9.5 41. A temporary decrease in government purchases causes the real interest rate to _____ and the price level to _____ in general equilibrium. 42. An increase in taxes (when Ricardian equivalence doesn’t hold) causes the real interest rate to _____ and the price level to _____ in general equilibrium. 43. Classical economists think general equilibrium is attained relatively quickly because 44. Keynesian economists think general equilibrium is not attained quickly because (a) the real interest rate adjusts slowly. (b) the level of output adjusts slowly. (c) the real wage rate adjusts slowly. (d) the price level adjusts slowly. Answer: D Level of difficulty: 1 Section: 9.5
Image of page 9

Subscribe to view the full document.

Chapter 9 The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis 141 45. Under an assumption of monetary neutrality, a change in the nominal money supply has 46. Keynesian economists believe that in the short run, 47. Classical economists believe that in the short run, 48. The aggregate demand curve shows (a) the demand for goods depending on the relative price of goods compared to financial assets. (b) the amount of output that can be obtained given the current production function in the economy. (c) the relation between the aggregate quantity of goods demanded and the price level. (d) the relation between the real interest rate and output when the goods market clears. Answer: C Level of difficulty: 1 Section: 9.6
Image of page 10
Image of page 11
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern