When an economy is facing a permanent positive supply shock,

		there is a movement down and along the short-run aggregate supply curve.
		output rises temporarily.
		there is a movement up and along the aggregate demand curve.
		inflation rate falls.

If the Fed's goal is to stabilize the economy, which of the following is the best strategy in face of a positive demand shock?

		Increase money supply.
		Conduct an open market sale.
		Do nothing.
		Lower the reserve requirements.

With the invention of self-driving cars, the U.S. economy experiences a permanent positive supply shock. To stabilize inflation rate, what should the Fed do?

		Increase the interest rate on reserves.
		Conduct an open market purchase.
		Do nothing.

Facing a temporary supply shock, the Fed

		faces a tradeoff betweens stabilizing inflation rate and stabilizing unemployment rate.
		should increase money supply.
		should decrease money supply.

Which of the following is false regarding Volcker disinflation in 1980-1986?

		The highest unemployment rate during the disinflation was over 15%.
		Inflation rate fell to less than 2% in 1986.
		Inflation was over 10% at the beginning of 1980.
		Volcker's strategy managed to reduce inflation but it caused massive unemployment.