In the classical model, what happens to the level of real GDP if aggregate demand increases?
A) Real GDP increases.
B) Real GDP decreases.
C) Real GDP would increase at first, then decrease.
D) Real GDP would remain the same, at equilibrium.
D
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The Augmented Dickey Fuller (ADF) t-statistic
A) has a normal distribution in large samples. B) has the identical distribution whether or not a trend is included or not. C) is a two-sided test. D) is an extension of the Dickey-Fuller test when the underlying model is AR(p) rather than AR(1).
Drawing on her account at Regional Bank, Samantha writes a check to Isabella, who deposits the check in her account at Local Bank. Once the check has cleared, which of the following will occur to the reserves of the banking system and the M1 money supply?
a. Bank reserves will increase; M1 will increase. b. Bank reserves will increase; there will be no change in M1. c. There will be no change in bank reserves; M1 will increase. d. There will be no changes in either bank reserves or M1.