If supply of a product increases and demand for the product decreases, equilibrium price will definitely change

Refer to Figure 11-2. Short run output is maximized at

A) L1. B) L2. C) L3. D) insufficient information to determine

Answer the following statement(s) true (T) or false (F)

1. The Federal Reserve’s policies with respect to the money supply have a direct effect on short-run nominal interest rates. 2. Even when the Fed changes the money supply by changing one of its policy variables, it has little effect on the money market equilibrium. 3. When interest rates on short-term financial assets such as CDs or U.S. Treasury bills are low, the opportunity cost of holding money is high. 4. A decrease in the demand for money will shift the money demand curve to the left. 5. The higher the price level, the lower the demand for money.