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© 2014 Pearson Canada Inc."- In the new classical model in Figure 27-3, an anticipated monetary expansion ____.
A) increases output from Yn to Y 2 , and the inflation rate from P 1 to P 2
B) decreases output from Yn to Y 4 , and the inflation rate from P 3 to P 4
C) does not change output and increases the inflation rate from P 1 to P 3
D) does not change output and decreases the inflation rate from P 3 to P 1
Answer: C
Diff: 2 Type: MC Page Ref: 695
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
- In the new classical model in Figure 27-3, the initial impact of an unanticipated monetary
contraction ____.
A) increases output from Yn to Y 2 , and the inflation rate from P 1 to P 2
B) decreases output from Yn to Y 4 , and the inflation rate from P 3 to P 4
C) does not change output and increases the inflation rate from P 1 to P 3
D) does not change output and decreases the inflation rate from P 3 to P 1
Answer: B
Diff: 3 Type: MC Page Ref: 695
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
- In the new classical model in Figure 27-3, the long-run effect of an unanticipated monetary
contraction ____.
A) increases output from Yn to Y 2 , and the inflation rate from P 1 to P 2
B) decreases output from Yn to Y 4 , and the inflation rate from P 3 to P 4
C) does not change output and increases the inflation rate from P 1 to P 3
D) does not change output and decreases the inflation rate from P 3 to P 1
Answer: D
Diff: 3 Type: MC Page Ref: 695
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
- In the new classical model in Figure 27-3, an anticipated monetary contraction ____.
A) increases output from Yn to Y 2 , and the inflation rate from P 1 to P 2
B) decreases output from Yn to Y 4 , and the inflation rate from P 3 to P 4
C) does not change output and increases the inflation rate from P 1 to P 3
D) does not change output and decreases the inflation rate from P 3 to P 1
Answer: D
Diff: 3 Type: MC Page Ref: 695
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy