Mod 32

An increase in the money supply causes ______ in output in the short run, and _______ in output in the long run.

• a decrease; an increase

• an increase; an increase

• no change; an increase

• no change; no change

• an increase; no change

Contractionary monetary policy causes _______ in the price level in the short run and _______ in the price level in the long run.

• no change; a decrease

• a decrease; a decrease

• a decrease; no change

• no change; no change

• a decrease; an increase

In the long run, changes in the money supply:

• affect both the aggregate price level and aggregate output.

• affect only the price level but they do not change aggregate output.

• affect only aggregate output but not the aggregate price level.

• have no impact on either the aggregate price level or aggregate output.

• affect only the unemployment rate, but not the aggregate price level.

In the long run, the only effect of monetary policy is on:

• the long-run aggregate supply.

• the interest rate.

• the aggregate output level.

• the aggregate price level.

• the rate of employment.

Suppose the economy is currently in long-run equilibrium at full employment levels of real GDP. If the money supply increases, in the long run, we would expect _____ in the price level, and _____ in real GDP.

• an increase; a decrease

• an increase; an increase

• a decrease; no change

• no change; an increase

• an increase; no change