MACROECONOMICS

QUESTION 3 Which of the following descriptions best depicts the short-run effect of a leftward shift of the monetary policy line? An increase in the rate of interest and a decline in both the rate of inflation and real GDP O A decline in both the rate of inflation and the rate of interest, along with an increase in real GDP O An increase in the rate of interest, no change in the rate of inflation, and a decline in real GDP A decline in real GDP and no change in either the rate of inflation or the rate of interest () 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, O inflation decreases relative to its value at the end of the short run. the interest rate increases relative to its value at the end of the short run. O the interest rate decreases relative to its value at the end of the short run. O output increases relative to its value at the end of the short run