Monetarists believe that an increase in the money supply will raise both Real GDP and the price level in the short run, and will only raise Real GDP in the long run.

Continued inflation occurs

If the natural unemployment rate is 7 percent and the current unemployment rate is 5 percent, then the economy is

Small-denomination time deposits rise and currency (held outside of banks) falls.  As a result

A moral hazard problem occurs after a loan is made, and the adverse selection problem occurs before a loan is made.

According to the Keynesian transmission mechanism, an increase in the money supply causes a(n) __________ in the interest rate and a(n) __________ in investment, which in turn causes a(n) __________ in total expenditures and aggregate demand.

Suppose the time period is before October 2008 and the Fed wants to decrease the money supply. It could the required reserve ratio, conduct an open market , or the discount rate.

Suppose that Real GDP is $14 trillion and Natural Real GDP is $17 trillion.  Possible fiscal policy solutions to close this gap are:  (give two)

If income rises from $10,000 to $10,600 and consumption rises from $9,100 to $9,622, the marginal propensity to consume (MPC) is

Figure 1 – use for Qs 22 & 23 ​