1. Which of the following explains why the demand curve for money is downward sloping

A. The quantity of money supplied is fixed by the consumer demand

B. The quantity of money supplied is fixed by the Federal Reserve

C. People want to hold a larger quantity of money when each dollar buys more

D. People want to hold a larger quantity of money when each dollar buys less.

2. Stagflation results from continued decreases in aggregate supply

A. True

B. False

3. Most economists believe unions are good for the economy as a whole

A. True

B. False

4. Which of the following is correct?

A. Unemployment can be changed by the use of government policy, but other sources of change are possible

B. Events that shift the long-run Phillips curve right also shift the long-run aggregate-supply curve right

C. In the long run, policymakers face a tradeoff between inflation and unemployment

D. The decrease in output associated with reducing inflation is more if the policy change is announced ahead of time and is credible

5. The assumption of a closed economy applies to the world economy

A. True

B. False

6. When inflation rises, the nominal interest rate rises, and people desire to hold less money

A. True

B. False

7. In the long run, a decrease in the money supply

A. lowers prices and leaves unemployment unchanged

B. leaves prices unchanged and raises unemployment

C. raises prices and leaves unemployment unchanged

D. leaves prices and unemployment unchanged