In an economy in which velocity is constant and real output grows at an average rate of 4 percent ...

In an economy in which velocity is constant and real output grows at an average rate of 4 percent per year, a 4 percent average rate of growth in the money supply would result in:
 a. a constant price level.
 b. a slowly increasing price level.
  c. a rapidly increasing price level.
  d. constant real GDP.
 e. constant nominal GDP.

QUESTION 2

Stagflation is defined as:
 a. decreased output accompanied by a higher price level.
  b. decreased output accompanied by a lower price level.
  c. increased output accompanied by a lower price level.
  d. increased output accompanied by a higher price level.
  e. stagnation in the rate of inflation.

QUESTION 3

In an economy in which velocity is constant and the same level of real output is produced year after year, a slow increase in the money supply would result in a:
 a. constant price level.
 b. slowly increasing price level.
  c. rapidly increasing price level.
  d. slowly increasing real GDP.
 e. rapidly increasing real GDP.

QUESTION 4

If global pollution causes climatic changes that permanently harm crop production worldwide, aggregate supply and demand analysis would lead us to expect:
 a. an increase in the price level.
 b. a decrease in the price level.
 c. rightward shifts of the aggregate demand and aggregate supply curves.
  d. a leftward shift of the aggregate demand curve.
 e. an increase in the potential level of real GDP.

QUESTION 5

In the long run, an increase in aggregate demand:
 a. increases the price level and real output, but the effect on the price level is larger.
  b. increases the price level and real output, but the effect on output is larger.
 c. affects only real output.
 d. affects only the price level.
 e. affects neither the price level nor real output.

QUESTION 6

Which of the following changes best represents the effect of the oil embargo (a shut-off of oil from certain OPEC countries) of the 1970s on the U.S.?
 a. A leftward shift of the long-run aggregate supply curve
 b. A rightward shift of the long-run aggregate supply curve
 c. A leftward shift of the aggregate demand curve
 d. A rightward shift of the aggregate demand curve
 e. A rightward movement along a given aggregate demand curve