the economics of money, banking, and financial markets

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24.8 APPENDIX 24.1 The Effects of Macroeconomic Shocks on Asset Prices

1. 
   

   Autonomous monetary policy ____ real interest rates and ____ aggregate output
   temporarily.
   A) raises; raises
   B) raises; lowers
   C) lowers; raises
   D) lowers; lowers
   Answer: A
   Diff: 2 Type: MC Page Ref: 24.1A- 1
   Skill: Recall
   Objective List: Appendix: The Effects of Macroeconomic Shocks on Asset Prices

   
   


2. 
   

   An anomoumous monetary policy that reduces real interest rates will ____ the inflation
   rate ____.
   A) raise; temporarily
   B) raise; permanently
   C) lower; permanently
   D) lower; temporarily
   Answer: A
   Diff: 2 Type: MC Page Ref: 24.A1- 1
   Skill: Recall
   Objective List: Appendix: The Effects of Macroeconomic Shocks on Asset Prices

   
   


3. 
   

   A ____supply shock ____ prices will cause the real interest rate to ____ in the
   short run.
   A) temporary; raises; rise
   B) temporary; lowers; fall
   C) permanent; raises; fall
   D) permanent; lowers; rise
   Answer: A
   Diff: 2 Type: MC Page Ref: 24.1A- 3
   Skill: Recall
   Objective List: Appendix: The Effects of Macroeconomic Shocks on Asset Prices