Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run
A) real GDP will be Y1, and the price level will be above P2.
B) real GDP will be between Y1 and Y2, and the price level will be between P1 and P2.
C) real GDP will be Y2, and the price level will be P2.
D) real GDP will be Y1, and the price level will be P1.
A
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Changes in total factor productivity are plausible causes of business cycles because
A) of the welfare theorems. B) the U.S. government is following supply-side economic policy. C) the model matches many stylized facts. D) prices are countercyclical.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and current international transactions become more positive (or less negative). b. There is not enough information to determine what happens to these two macroeconomic variables. c. The quantity of real loanable funds per time period rises, and current international transactions become more negative (or less positive). d. The quantity of real loanable funds per time period rises, and current international transactions remain the same. e. The quantity of real loanable funds per time period and current international transactions remain the same.