the economics of money, banking, and financial markets

783 "

© 2014 Pearson Canada Inc."

23. 
    

    In the new classical model in Figure 27-3, an anticipated contractionary monetary policy
    ____.
    A) shifts the economy from point 1 to point 2 to point 3
    B) shifts the economy from point 1 to point 4 to point 3
    C) shifts the economy from point 1 to point 3
    D) shifts the economy from point 3 to point 1
    Answer: D
    Diff: 2 Type: MC Page Ref: 695
    Skill: Applied
    Objective List: 25.1 Discern between activist and non-activists views on monetary policy

    
    


24. 
    

    In the new classical model in Figure 27-3, an unanticipated contractionary monetary policy
    ____.
    A) shifts the economy from point 1 to point 2 to point 3
    B) shifts the economy from point 1 to point 4 to point 3
    C) shifts the economy from point 1 to point 3
    D) shifts the economy from point 3 to point 4 to point 1
    Answer: D
    Diff: 2 Type: MC Page Ref: 695
    Skill: Applied
    Objective List: 25.1 Discern between activist and non-activists views on monetary policy

    
    

25 ) In the new classical model in Figure 27-3, the initial impact of an unanticipated 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: A
Diff: 2 Type: MC Page Ref: 695
Skill: Applied
Objective List: 25.1 Discern between activist and non-activists views on monetary policy

26. In the new classical model in Figure 27-3, the long-run effect of an unanticipated 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