If the Fed reacts to a negative real shock by raising aggregate demand, it can keep the inflation rate stable.    

When consumers suddenly become more pessimistic about the economy, a negative aggregate demand shock shifts the:   a.  LRAS curve inward, reducing the real growth rate in the short run.   b.  LRAS curve outward, reducing the real growth rate in the short run.   c.  AD curve inward, reducing the real growth rate in the short run.   d.  AD curve outward, reducing the real growth rate in the short run.

When the Federal Reserve increases the growth rate of the money supply to combat a negative real shock, the growth rate of real GDP:   a.  will increase more than the inflation rate.   b.  will increase less than the inflation rate.   c.  and the inflation rate will both increase by the same amount.   d.  and the inflation rate will both decrease by the same amount.

As a result of an increase in the growth rate of the money supply:   a.  real GDP growth increases only in the short run, and the inflation rate increases in both the short run and the long run.   b.  real GDP growth increases only in the long run, and the inflation rate increases only in the short run.   c.  real GDP growth increases in both the short run and the long run, and the inflation rate increases only in the short run.   d.  both the real growth and the inflation rate increase only in the short run.

Monetary policy is used to stabilize the economy by changing factors that shift the:   a.  AD curve.   b.  SRAS curve.   c.  LRAS curve.   d.  aggregate demand, short-run aggregate supply, and LRAS curves.

In the short run, a negative AD shock will cause the growth rate of output to:   a.  increase.   b.  decrease.   c.  remain unchanged.   d.  become more volatile.

The Fed will lower the interest rate paid on reserves if it wants to increase the money supply.

Total reserves are equal to all of the following EXCEPT

According to the Simple Deposit Multiplier if the Federal reserve conducts an open market purchase in the amount of $400 and the required reserve ration is 20% what is the change in deposits?

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