the economics of money, banking, and financial markets

741 $

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10. 
    

    Everything else held constant, when financial frictions increase, the real cost of borrowing
    ____ so that planned investment spending ____ at any given inflation rate.
    A) increases; falls
    B) decreases; falls
    C) decreases; rises
    D) increases; rises
    Answer: A
    Diff: 2 Type: MC Page Ref: 575
    Skill: Recall
    Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
    of aggregate output and the inflation rate

    
    


11. 
    

    Everything else held constant, an increase in financial frictions ____ aggregate
    ____.
    A) increases; demand
    B) decreases; demand
    C) decreases; supply
    D) increases; supply
    Answer: B
    Diff: 2 Type: MC Page Ref: 575
    Skill: Recall
    Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
    of aggregate output and the inflation rate

    
    


12. 
    

    Everything else held constant, an increase in government spending ____ aggregate
    ____.
    A) increases; demand
    B) decreases; demand
    C) decreases; supply
    D) increases; supply
    Answer: A
    Diff: 2 Type: MC Page Ref: 575
    Skill: Recall
    Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
    of aggregate output and the inflation rate

    
    


13. 
    

    Everything else held constant, a decrease in government spending ____ aggregate
    ____.
    A) increases; demand
    B) decreases; demand
    C) decreases; supply
    D) increases; supply
    Answer: B
    Diff: 2 Type: MC Page Ref: 575
    Skill: Recall
    Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
    of aggregate output and the inflation rate