839 $
© 2014 Pearson Canada Inc.$
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
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
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
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