Calculate the change in the price level for each of the following events, taken one at a time, with other variables unchanged.
(a) Money supply increases 10%.
(b) Money demand increases 5%
(c) Money supply decreases 5% while money demand increases 5%.
(d) Money supply increases 15% while money demand increases 5%.
(a) 10%
(b) -5%
(c) -10%
(d) 10%
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The table above gives data for the nation of Mosh. If we graphed these data, we would see that when GDP equals
A) $10 trillion, the AE curve intersects the 45° line. B) $9 trillion, the AE curve intersects the 45° line. C) $6 trillion, the AE curve is below the 45° line. D) $10 trillion, the 45° line is above the AE curve. E) $4 trillion, the AE curve intersects the 45° line.
One of the primary objections to the new classical model is that ________
A) firms could easily get information about price movements and so would not be fooled for very long B) price is negatively related to quantity demanded, but positively related to quantity supplied C) business cycles are relatively brief in duration D) it failed to incorporate rational expectations into its presentation