For a given money demand curve, an increase in money supply:

For a given money demand curve, an increase in money supply:
 a. drives up the real interest rate.
 b. lowers the opportunity cost of holding money.
 c. decreases the quantity of money demanded.
 d. drives down the price level in an economy.
 e. contracts the total output produced in an economy.

QUESTION 2

Given implicit or explicit resource price agreements, if the actual price level is below the expected price level, the:
 a. economy will move rightward along the short-run aggregate supply curve.
  b. economy will move leftward along the short-run aggregate supply curve.
  c. short-run aggregate supply curve will shift to the left.
 d. long-run aggregate supply curve will become steeper.
 e. short-run aggregate supply curve will become flatter.

QUESTION 3

In the money market, if the money supply decreases, the opportunity cost of holding money:
 a. decreases and the quantity of money demanded increases.
 b. decreases and the quantity of money demanded falls.
 c. increases and the quantity of money demanded falls.
 d. increases but the quantity of money demanded remains unchanged.
  e. increases and the quantity of money demanded also increases.

QUESTION 4

If the actual price level is less than the expected price level reflected in long-term contracts, _____.
 a. firms will find production more profitable in the short run than they had expected and will decrease the quantity of output supplied
  b. firms will find production less profitable in the short run than they had expected and will decrease the quantity of output supplied
  c. firms will find production more profitable in the short run than they had expected and will increase the quantity of output supplied
  d. resource owners will earn higher returns in the short run than they had expected and will decrease the quantity of resources supplied
  e. unemployment will increase in the short run as firms will substitute labor with capital inputs

QUESTION 5

Which of the following will result in the money market when the price level in an economy rises, while the supply of money remains unchanged?
 a. The demand for money will decrease.
 b. The supply of money will increase.
 c. The rate of interest will decrease.
 d. The total investment spending in the economy will increase.
  e. The rate of interest will increase.

QUESTION 6

If the price level in an economy turns out to be higher than that expected by workers and firms, _____.
 a. businesses increase production.
 b. the economy's potential output level increases.
 c. the economy's short-run aggregate supply curve shifts rightward.
  d. the economy's short-run aggregate supply curve shifts leftward.
  e. a recessionary gap develops.