Q1: From an initial long-run equilibrium, if aggregate
demand grows faster than long-run and short-run aggregate
supply, then Congress and the president would most
likely
Select one:
a. decrease tax rates.
b. decrease oil prices.
c. decrease government spending.
d. decrease money supply
Q2: If the Fed lowers the money supply, this will
________ interest rates and ________ the equilibrium quantity of
money
Select one:
a. reduce; raise
b. increase; lower
c. increase; raise
d. reduce; lower
Q3: The money demand curve has a negative slope
because lower interest rates ________ the opportunity cost of
holding money, and cause
Select one:
a. lower, households and firms to switch from money to
financial assets.
b. lower, households and firms to switch from financial
assets to money.
c. raise, households and firms to switch from money to
financial assets.
d. raise, households and firms to switch from financial
assets to money.