Figure 3: The AD-SRAS-LRAS diagram Refer to figure 3. If the economy is in long-run equilibrium, then an adverse shift in aggregate demand would move the economy from

The price of a basket of goods and services in the U.S. is $500.  In Canada, the same basket costs 600 Canadian dollars.  If the nominal exchange rate were 1.4 Canadian dollars per U.S. dollar, what would be the real exchange rate?

Which of the following could be a consequence of an appreciation of the U.S. real exchange rate?

Table 2    Refer to table 2. Instead, suppose the Bank of Duluth keeps no excess reserves in the T-account above. If a customer deposits an additional $7,000 into his account at the Bank of Duluth, banks keep no excess reserves and agents hold no currency in their hands, then the money supply will increase by

The indirect provision of funds to borrowers is accomplished by

Morgan decides to go on a vacation for which he withdraws $2,500 from his savings account (NOT his checking account. Recall, saving accounts are part of M2 and M1 is a part of M2). As a result of this transfer by itself

The long-run aggregate supply curve shows that, by itself, a permanent increase in aggregate demand would lead to a long-run 

Table 2   Refer to table 2. Instead, suppose the Bank of Duluth keeps no excess reserves in the T-account above. If a customer deposits an additional $5,000 into his account at the Bank of Duluth, banks keep no excess reserves and agents hold no currency in their hands, then the money supply will increase by

If the multiplier is 6 and if there is no crowding-out effect, then a $60 billion increase in government expenditures causes aggregate demand to

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)?