Question

5. According to classical economic theory, which of the following do changes in the money supply affect?

a. real GDP

b. real interest rates

c. the price level

d. unemployment



7. Which of the following does the downward slope of the aggregate-demand curve show?

a. that an increase in the money supply causes the aggregate quantity of goods and services demanded to increase

b. that an increase in the money supply causes the aggregate quantity of goods and services demanded to decrease

c. that an increase in the price level causes the aggregate quantity of goods and services demanded to increase

d. that an increase in the price level causes the aggregate quantity of goods and services demanded to decrease


10. Which of the following shifts aggregate demand to the right?

a. a decrease in the money supply

b. a decrease in net exports at every exchange rate

c. a decrease in prices

d. a decrease in taxes

Answer 1

5. According to classical economic theory, which of the following do changes in the money supply affect?

b. real interest rates

• Money supply is a function of interest rate.

7. Which of the following does the downward slope of the aggregate-demand curve show?

d. that an increase in the price level causes the aggregate quantity of goods and services demanded to decrease

• Aggregate demand curve shows a relationship between the price level and the aggregate demand in the economy.

10. Which of the following shifts aggregate demand to the right?

d. a decrease in taxes

• A decrease in taxes increases the disposable income, which increases the consumption in the economy and hence, an increase in the aggregate demand.

Posted 4 days ago