the economics of money, banking, and financial markets

781 "

© 2014 Pearson Canada Inc."

17. 
    

    According to the new classical school of thought, a continually increasing money supply
    causes ____.
    A) the aggregate demand curve to shift continually to the right, and the price level to increase
    continually
    B) the aggregate supply curve to shift continually to the right, and the price level to increase
    continually
    C) the long-run aggregate supply curve to shift continually to the right, and the price level to
    increase continually
    D) both B and C of the above
    Answer: A
    Diff: 2 Type: MC Page Ref: 695
    Skill: Applied
    Objective List: 25.1 Discern between activist and non-activists views on monetary policy

    
    


18. 
    

    In the new classical model, an anticipated policy of a continually increasing money supply
    causes ____.
    A) the aggregate demand curve to shift right along a stationary aggregate supply curve, leading
    to continually increasing aggregate output and prices
    B) the aggregate supply curve to shift left along a stationary aggregate demand curve, leading to
    continually contracting aggregate output and prices
    C) the aggregate demand curve to shift continually to the right while simultaneously the
    aggregate supply curve shifts continually inward, leading to higher and higher price levels
    D) the aggregate demand curve to shift continually to the left while simultaneously the aggregate
    supply curve shifts continually outward, leading to higher and higher price levels
    Answer: C
    Diff: 3 Type: MC Page Ref: 695
    Skill: Applied
    Objective List: 25.1 Discern between activist and non-activists views on monetary policy

    
    


19. 
    

    In the new classical model, an unanticipated increase in the money supply causes ____.
    A) the aggregate demand curve to shift to the right along a stationary aggregate supply curve
    B) both the aggregate demand and supply curves to shift simultaneously to the right
    C) the aggregate demand curve to shift to the right as the aggregate supply curve simultaneously
    shifts to the left
    D) both the aggregate demand and supply curves to shift simultaneously to the left
    Answer: A
    Diff: 3 Type: MC Page Ref: 695
    Skill: Recall
    Objective List: 25.1 Discern between activist and non-activists views on monetary policy