Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:

The European Central Bank:

A) emphasizes maintaining interest rates below 5%. B) lays more emphasis on controlling employment than on controlling inflation. C) emphasizes maintaining unemployment rates below 5%. D) lays more emphasis on controlling inflation than on controlling employment.

Answer the following statements true (T) or false (F)

1. When you deposit money at a bank, the bank will normally turn around and lend most of it to a borrower. 2. If all depositors of a bank were to try withdrawing all their deposits at the same time, a good solid bank should be able to meet all the withdrawals. 3. When cash is deposited at a bank, the composition of the money supply is changed but the total supply of money is not. 4. When a bank's loan defaults, then the bank's reserves will decrease. 5. The amount of required reserves that a bank must hold is computed as a certain fraction of the bank's assets.