Interest rates in the economy have risen. How will this affect aggregate demand and equilibrium in the short run?
A) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise.
B) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall.
C) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall.
D) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.
C
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If the Fed was to use all of its three most common tools to increase the money supply, it would:
a. buy bonds, reduce the discount rate, and reduce reserve requirements. b. sell bonds, reduce the discount rate, and reduce reserve requirements. c. sell bonds, reduce the discount rate, and increase reserve requirements. d. sell bonds, increase the discount rate, and increase reserve requirements.
The standard of living in an economy is best measured by:
A. output per person. B. total output. C. average labor productivity. D. the inflation rate.