Question 1

If a negative real shock affects the economy's long-run potential growth rate and the Fed responds by lowering the money supply growth rate,then the economy will experience:

Accepted Answer

A)   too little real growth and low inflation.
B)   too little real growth and high inflation.
C)   high real growth and low inflation.
D)   high real growth and high inflation.E) All of the above
F) C) and D)

Question 2

How can the Fed offset a positive shock to aggregate demand?

Accepted Answer

A)   Increase the growth rate of the money supply.
B)   Decrease the growth rate of the money supply.
C)   Increase the growth rate of government spending.
D)   Decrease the growth rate of government spending.E) A) and B)
F) A) and C)

Exam 16: Monetary Policy

If a negative real shock affects the economy's long-run potential growth rate and the Fed responds by lowering the money supply growth rate,then the economy will experience:

Correct Answer
verified

How can the Fed offset a positive shock to aggregate demand?

Correct Answer
verified

Exam 16: Monetary Policy

If a negative real shock affects the economy's long-run potential growth rate and the Fed responds by lowering the money supply growth rate,then the economy will experience:

Correct AnswerverifiedShow Answer

How can the Fed offset a positive shock to aggregate demand?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified