the economics of money, banking, and financial markets

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18. 
    

    A positive aggregate demand shock will only impact ____.
    A) the equilibrium output
    B) the equilibrium inflation rate
    C) the short run aggregate supply curve
    D) none of the above
    Answer: D
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


19. 
    

    An example of a positive aggregate demand shock is ____.
    A) carbon cap-and-trade program
    B) productivity improving technological innovation
    C) an increase in the price of oil
    D) the shale gas revolution
    Answer: B
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


20. 
    

    The difference in outcomes occurring with a credible nominal anchor and without one, given
    a positive aggregate demand shock is that ____.
    A) with the credible policy there is no shift in the aggregate supply curve
    B) there is no difference but credibility provides national security
    C) without credible policy, inflation will continue to spiral upwards
    D) with credible policy, the aggregate supply curve shifts back quickly
    Answer: A
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


21. 
    

    With a negative aggregate demand shock, monetary policy credibility can ____.
    A) stabilize output
    B) set inflation equal to zero
    C) determine the effective interest rate
    D) prevent financial malfeasance
    Answer: A
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates