Question
Please answer the following questions: 21. Which of the following statements about the long run is correct? a. Both real GDP and the price level
Please answer the following questions:
21. Which of the following statements about the long run is correct?
a. Both real GDP and the price level are determined by aggregate demand.
b. Real GDP is determined by aggregate demand and the price level is determined by Y*.
c. Long-run real GDP is determined by aggregate demand and the price level is determined solely by the AS curve.
d. Long-run real GDP is determined by Y* and the long-run price level is determined by the AD curve.
e. Both real GDP and the price level are determined by Y*.
22. High and uncertain inflation is damaging to the economy because...
a. All of the others are correct.
b. There can be unexpected reallocations of real income between workers and firms.
c. There can be unexpected reallocations of real income between borrowers and lenders.
d. The price system is no longer capable of effectively signalling changes in relative scarcity through changes in relative prices.
e. Individuals who receive their incomes in fixed nominal terms are made worse off.
23. One implication of an increase in the cash drain to the public is that the...
a. Desired reserve ratio is increased.
b. Banking system cannot create any additional money following a new deposit.
c. Desired reserve ratio is reduced.
d. Banking system's ability to create new money following a new deposit is reduced.
e. Amount of new money that can be created from a new source of reserves is increased.
39. The amount of currency in circulation in the Canadian economy is described as being endogenous. This description is appropriate because the...
a. Bank of Canada targets the money supply directly.
b. Process of deposit creation by the commercial banks is determined by the Bank of Canada.
c. Bank of Canada conducts its open-market operations in response to the changing demand for cash from the commercial banks.
d. Commercial banks determine the currency in circulation in response to the Bank of Canada's changes to the money supply.
e. Bank of Canada targets the currency in circulation directly.
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