MACROECONOMICS

QUESTION 3 Which of the following descriptions best depicts the short-run effect of a leftward shift of the monetary policy line? 0 An increase in the rate of interest and a decline in both the rate of inflation and real GDP 0 A decline in both the rate of inflation and the rate of interest, along with an increase in real GDP 0 An increase in the rate of interest, no change in the rate of inflation, and a decline in real GDP 0 A decline in real GDP and no change in either the rate of inflation or the rate of interest 0 A decline in the rate of inflation, the rate of interest, and real GDP QUESTION 4 Assume that a demand shock results from the central bank seeking to increase the rate of inflation, and that the short-run effect has already taken place. In the medium run, 0 inflation decreases relative to its value at the end of the short run. 0 the interest rate increases relative to its value at the end of the short run. 0 the interest rate decreases relative to its value at the end of the short run. 0 output increases relative to its value at the end of the short run