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Suppose the economy is in a recession.If the central bank intervenes to eliminate the recessionary gap, then in the long-run, the inflation rate will be

Suppose the economy is in a recession.If the central bank intervenes to eliminate the recessionary gap, then in the long-run, the inflation rate will be _____ than had they not intervened.

  1. greater
  2. less
  3. no different
  4. not enough information

Which of the following statements best describes the concept of monetary neutrality?

  1. Changes in the money supply have no affect on real variables in the short-run, but do have an effect on nominal variables in the short-run
  2. Changes in the money supply have no affect on nominal variables in the short-run, but do have an effect on real variables in the short-run
  3. Changes in the money supply have no affect on real variables in the long-run, but do have an effect on nominal variables in the long-run
  4. Changes in the money supply have no affect on nominal variables in the long-run, but do have an effect on real variables in the long-run

Suppose that in Nation X in 2012, the money supply was 20,000, the velocity of money was 6 and real GDP was 60,000 units.

Given the information above, what was the price level in 2012?

  1. $1.80
  2. $2.00
  3. $3.00
  4. none of the above

Given the information above, if, all else constant, the central bank of Nation X increased the money supply the money supply to $20,500 in 2013, then what would the price level be in 2013?

  1. $1.60
  2. $2.46
  3. $2.50
  4. none of the above

Given the information above, if, all else constant, the central bank of Nation X increased the money supply to $20,500 in 2013, then what would the inflation rate be between 2012 and 2013?

  1. 2.30%
  2. 3.40%
  3. 5.00%
  4. none of the above

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