1.The quantity theory of money, can be used to show what relationship between P,
ID: 1160922 • Letter: 1
Question
1.The quantity theory of money, can be used to show what relationship between P, M and Y?
a.Inverse relationship between P and M, given Y
b. Inverse relationship between P and Y, given M
c. Positive or direct relationship between P and Y, given M
d. None of the above
2. Sticky prices give us what type of supply curve?
a. Long run horizontal supply curve
b. Long run vertical supply curve
c. Short run horizontal supply curve
d. Short run vertical supply curve
3.The long run aggregate supply curve (LRAS) implies that unemployment is
a At the natural rate
b The sum of structural and frictional unemployment
c Both (a) and (b)
d None of the above
4 Imagine that the economy is at the intersection of LRAS, SRAS and AD curves. If M is increased what happens to prices?
a They are unchanged in the SR and rise in the LR along the AD
b They rise in the SR
c They are unchanged in the SR and fall in the LR along the AS
d None of the above
5 Imagine that the economy is at the intersection of LRAS, SRAS and AD curves. If M is decreased what happens to output ?
a They are unchanged in the SR and rise to the LR level along the AD
b They fall in the SR and fall to the LR level along the AD
c They rise in the SR and fall to the LR level along the AD
d They fall in the SR and rise to the LR level along the AD
6 Statement 1: In the Keynesian view, C+I+G is the planned expenditure which matches actual expenditure only at the equilibrium.
Statement 2: In the Keynesian view, C+I+G is the actual expenditure which matches planned expenditure always at all levels of Y.
a Statement 1 is true, Statement 2 is true.
b Statement 1 is true, Statement 2 is false.
c Statement 1 is false, Statement 2 is true.
d Statement 1 is false, Statement 2 is false.
7. Show using graphs how to derive the IS curve.
8. Show the effect of a rise in T, using the Keynesian Cross and its effect on the IS curve.
Explanation / Answer
Ans
1 not be of the above. It shows positive relationship between Mandy P
2 B. It gives longrun vertical supply vurve
3 both A and B are true
4 none of the above. They rise in both shortrun and longrun
5 b is right
6 b in s right. They are equal only in equilbrium
Can answer only 4 parts according to Chegg policy but still answered more
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