the economics of money, banking, and financial markets

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© 2014 Pearson Canada Inc.$

26. 
    

    Which of the following components is NOT included in the equation for the short-run
    aggregate supply curve?
    A) Nominal interest rate
    B) Inflation
    C) Expected inflation
    D) Output gap
    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

    
    


27. 
    

    With a negative aggregate supply shock, monetary policy credibility can ____.
    A) produce a better outcome
    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

    
    


28. 
    

    If a negative aggregate supply shock occurs and monetary policy is not credible then
    ____.
    A) inflation will higher and output lower than with credible policy
    B) the equilibrium interest rate will fall
    C) there will be a corresponding autonomous decrease in aggregate supply
    D) none of the above
    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

    
    


29. 
    

    A negative aggregate supply shock will impact ____.
    A) the equilibrium output
    B) the equilibrium inflation rate
    C) the short run aggregate supply curve
    D) all 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