In the long run, an expansionary monetary policy will lead to:
a. a decrease in aggregate expenditure.
b. an increase in unemployment.
c. an increase in the price level.
d. an increase in potential output.
e. a decrease in the price level.
QUESTION 2Which of these is most likely to reduce the potential output of an economy?
a. An increase in the size of the labor force
b. A deterioration in the quality of the labor force
c. A decrease in the cost of using computers
d. A decrease in the price level
e. An increase in the price level
QUESTION 3According to the equation of exchange, if the amount of money in an economy multiplied by the velocity of money equals 800 million dollars, then this economy's:
a. real GDP equals 800 million.
b. nominal GDP equals 800 million.
c. real GDP equals 800 million times the price level.
d. nominal GDP equals 800 million times the price level.
e. price level equals 800.
QUESTION 4Which of these is most likely to shift the long-run aggregate supply curve to the left?
a. An increase in the average workweek
b. An improvement in technology
c. A civil war
d. A decrease in aggregate demand
e. A decline in global oil prices
QUESTION 5If the money supply is 600, the price level is 2, and real GDP is 300, the velocity of money is _____.
a. 1
b. 150
c. 300
d. 600
e. 1,200
QUESTION 6Given the aggregate demand curve, a beneficial supply shock will:
a. increase potential output and the price level.
b. decrease potential output and the price level.
c. increase potential output and decrease the price level.
d. decrease potential output and increase the price level.
e. cause no change in potential output or the price level.
QUESTION 7If the money supply in an economy is 300, the price level is 4, and real GDP is 1,500, what is the nominal value of output?
a. 1,200
b. 4,500
c. 6,000
d. 180,000
e. 500
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