Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:

Assuming that there is an excess supply of money in the classical model, then

a. a matching excess demand for commodities will lower the aggregate price level. b. a corresponding excess demand for commodities will drive the aggregate price level up. c. an equal excess demand for commodities will not affect the price level. d. None of the above

The OLS residuals

A) can be calculated using the errors from the regression function. B) can be calculated by subtracting the fitted values from the actual values. C) are unknown since we do not know the population regression function. D) should not be used in practice since they indicate that your regression does not run through all your observations.