Version B I8S ECON103 38. Expansionary monetary policy a. lowers interest rates,
ID: 1132376 • Letter: V
Question
Version B I8S ECON103 38. Expansionary monetary policy a. lowers interest rates, causing aggregate demand to shift to the right. b. raises interest rates, causing aggregate demand to shift to the left. c. lowe ers interest rates, causing aggregate demand to shift to the left lowers interest rates, causing short-run aggregate supply to shift to the right raises interest rates, causing aggregate demand to shift to the right. the effects of monetary policy are amplified. the unemployment rate will decrease. e. 39. If people anticipate the strategies of the central bank, a. b the effects of monetary policy are extremely limited. c. d. e. prices become more sticky and monetary policy does not work. the unemployment rate will increase. 40. An unplanned increase in inventories results from a. actual investment that is greater than planned investment. b. an increase in spending on new houses. c. a decrease in planned investment. d. actual investment that is less than planned investment. e. an increase in planned investment. 41. Suppose on-campus housing at the University of Delaware cost $6,530 (per year) in 2006 and $8,870 in 2017. If the price index was 201 in 2006 and 245 in 2017, then a. housing cost suffers from money illusion due to automatic billing. b. housing cost has increased more slowly than inflation. c. housing cost has increased more rapidly than inflation. d. nominal housing cost has decreased. e. housing cost has increased at about the same rate as inflation. 42. If a 12 oz. bottle of coke costs $1.00 today when today's price index is 245, and if the price index in 1949 was 24, then a. a bottle of pepsi would cost about $0.05 in 1949 because it typically costs about the same as a bottle of coke. if a bottle of coke cost S0.05 in 1949, it was relatively cheap compared to inflation-adjusted prices today. the price of a bottle of coke would never increase at the same rate as inflation because it is a food iten. a bottle of coke cost about $10.20 in 1949. bottle of coke cost about $0.15 in 1949. b. c. d. e a 43. If an economy experiences economic growth, does that mean that everyone in that economy will be better off a. No, it means that the average person is better off b. No, economic growth is not correlated with standards of living. c. Yes, that is the definition of economic growth. d. Yes, but only if nominal gross domestic product (GDP) increases. e. Yes, but only if there is little immigration during that time period. Page 8Explanation / Answer
38)
Expansionary monetary policy increases money supply and reduces interest rate. Fall in interest rate leads to rise in aggregate demand in an economy. It will shift aggregate demand to right.
Hence, right answer is : (a)
39)
If people anticipates the strategies of the central bank, they will start behaving accordingly. Hence, effectiveness of monetary policy gets declined.
Right answer is : (b)
40)
Right answer is : (a)
Unplanned inventory piles up when actual investment is greater than planned investments.
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