786 "
© 2014 Pearson Canada Inc."- In the new classical model, an expansionary monetary policy will lead to a decline in
aggregate output if ____.
A) the increase in money supply is less than anticipated
B) the increase in money supply is greater than anticipated
C) the increase in money supply comes as a surprise
D) the Bank of Canada announces the policy decision prior to its implementation
Answer: A
Diff: 2 Type: MC Page Ref: 696
Skill: Recall
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
Figure 27- 4
In the new classical model in Figure 27-4, an anticipated increase in aggregate demand that
is less than expected ____.
A) moves the economy from point 1 to point 2 to point 3
B) moves the economy from point 1 to point 5 to point 3
C) moves the economy from point 1 to point 4 to point 3
D) moves the economy from point 1 to point 3
Answer: B
Diff: 2 Type: MC Page Ref: 697
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
In the new classical model in Figure 27-4, the initial impact of an anticipated increase in
aggregate demand that is less than expected ____.
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 5 , and increases the inflation rate from P 1 to P 5
C) decreases output from Yn to Y 4 , and increases the inflation rate from P 1 to P 4
D) does not change output and increases the inflation rate from P 1 to P 3
Answer: B
Diff: 2 Type: MC Page Ref: 697
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy