In theAD-ASmodel, increasing the interest rate initially shifts the

Select one:

a.AD curve leftward.

b.SAS curve upward.

c.AD curve rightward.

d.long-run AS curve leftward.

e.long-run AS curve rightward.

Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level?

Select one:

a.A decrease in taxes.

b.Open market operations.

c.An increase in government expenditure.

d.An increase in taxes.

e.None of the above answers is correct.

An increase in salary of government employees shifts the AD curve ________ and an increase in personal taxes shifts the AD curve ________.

Select one:

a.rightward; rightward

b.rightward; leftward

c.rightward; towards LAS curve.

d.leftward; rightward

e.leftward; leftward

The quantity theory of money states that real GDP is

Select one:

a.not influenced by the quantity of money.

b.never different from potential GDP.

c.equal to nominal GDP multiplied by the quantity of money.

d.inflation results from changes in real interest rate in the long run.

e.equal to nominal GDP divided by the quantity of money.

Financial innovations can have the effect of

Select one:

a.only increasing the demand for money.

b.increasing the Reserve Bank's monetary policy.

c.either increasing or decreasing the demand for money depending on what the innovation is.

d.only decreasing the demand for money.

e.none of the above are correct.