Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 

Assuming an increase in money demand, then if the Federal Reserve

a. can keep the interest rate unchanged assuming that it changes the monetary base by the appropriate amount. b. would have to aim below their previous money stock target. c. would not have to cut taxes to keep output from falling. d. All of the above e. None of the above

Under a system of flexible exchange rates, transactions that increase the supply of the nation's currency to the foreign exchange market will cause the nation's

a. currency to depreciate in value. b. currency to appreciate in value. c. trade deficit to increase. d. products to become more expensive to foreigners.