Question

Which of the following would cause an increase in the natural level of unemployment?

	a decrease in taxes
	a decrease in the money supply
	a decrease in government spending
	an increase in taxes
	none of the above

If u < un, we know with certainty that:

Question 7 options:

	Y < Yn
	P >Pe
	P = Pe
	Y = Yn
	More than one of the above

Suppose i = 5%, i* = 8%, and that the domestic currency is expected to appreciate by 3% during the coming year. Given this information, we know that:

	individuals will be indifferent about holding domestic or foreign bonds.
	individuals will only hold domestic bonds.
	the interest parity condition holds.
	individuals will only hold foreign bonds.
	more than one of the above

If nominal GDP rises from $20 trillion to $22 trillion, while the GDP deflator rises from 2.0 to 2.5, the percentage change in real GDP is:

	-12%
	1.1%
	9.1%
	20%
	0%

An increase in the money supply will, in the short run, cause:

	the LM curve to shift upward.
	the wage setting curve to shift downward.
	the wage setting curve to shift upward.
	the price setting curve to shift downward.
	the AD curve to shift rightward.

Answer 1

a decrease in the money supply would cause an increase in the natural level of unemployment

If u < un, we know with certainty that Y < Yn

Suppose i = 5%, i* = 8%, and that the domestic currency is expected to appreciate by 3% during the coming year. Given this information, we know that:the interest parity condition holds. and individuals will be indifferent about holding domestic or foreign bonds

If nominal GDP rises from $20 trillion to $22 trillion, while the GDP deflator rises from 2.0 to 2.5, the percentage change in real GDP is: Real GDP initial = 20/2=10 trillion , next level real GDP = 22/2.5=8.8 trillion thus change in real GDP 8.8-10/10=-0.12=-12%

An increase in the money supply will, in the short run, cause:the LM curve to shift upward. and the AD curve to shift rightward.