27In the Income-Expenditure Model, contractionary monetary policy leads to:

a.lower interest rates, an increase in planned investment spending, and an increase in equilibrium GDP

b.lower interest rates, a decrease in planned investment spending, and a decrease in equilibrium GDP

c.higher interest rates, an increase in planned investment spending, and an increase in equilibrium GDP

d.higher interest rates, a decrease in planned investment spending, and a decrease in equilibrium GDP

27.

Given the supply of, and demand for, money in the diagram below, if interest rates are at "i law\": then: Nominal Interest Money Supply Quantity of Money 0 a. Quantity of interest-bearing assets (such as bonds) supplied is greater than quantity demanded for bonds, 0 b. Quantity of interest-bearing assets demanded is greater than its quantity supplied. 0 c. Quantity of money demanded is less than quantity of money supplied. 0 d. Interest rates tend to decrease. LRAS SRAS Price Level A AD 0 Q, ON Real GDP Refer to Exhibit 9-1. The economy is currently producing Q1. If an economist believes the economy can move itself without government intervention to point A at QN level of Real GDP then she believes that the O a. LRAS curve will shift leftward until it intersects the SRAS and AD curves at Q1. O b. AD curve will shift rightward and intersect the SRAS curve at point B. O c. SRAS curve will shift rightward and intersect the AD curve at point A. O d. economy will likely stay "stuck" in short-run equilibrium