Scenario 1 In 2007-09, the U.S. economy went through its worst economic downturn in 30 years. As a consequence of the sharp increase in the price of housing in the U.S. in the mid-2000s, a rapid increase in the demand for oil drove up oil prices. Additionally, the collapse of the housing market, which led to Lehman Brothers’ bankruptcy, generated a financial crisis that reduced private spending.   Refer to scenario 1. Within the framework of the AD-SRAS-LRAS model discussed in class, what would happen with prices and output in the U.S. in the short-run if the economy initially starts in a situation of long-run equilibrium and is then hit by: (i) a shock that increases the price of oil; and (ii) a financial crisis that reduces private spending (assume that the shock in (i) is larger in magnitude than the shock in (ii). Call this new short-run equilibrium point A)?

Figure 2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.   Refer to figure 2. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is

Figure 2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.   Refer to figure 2. What is true about the increase in quantities measured along the horizontal axis from 0.33 to 0.5?

What is true about trade data over the past four decades in the US?

If the exchange rate is 0.60 British pounds per $1, a bottle of pop that costs 3 pounds in Great Britain costs, in the U.S.,

Other things the same, an increase in velocity means that

Table 2   Refer to table 2. If the Bank of Duluth 3 percent of deposits as excess reserves, what is the reserve requirement ratio and the value of the multiplier implied by the reserve requirement ratio?  

If the exchange rate is 0.80 British pounds per $1, a bottle of pop that costs 6 pounds in Great Britain costs, in the U.S.,

Suppose an economy produces only ice cream cones. If the price level rises, the value of currency

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries.  This increase would make foreigners