In the Aggregate Demand-Aggregate Supply Model, the Short-Run Effects of an Unanticipated

question 93

Multiple Choice

In the aggregate demand-aggregate supply model, the short-run effects of an unanticipated decrease in the money supply will be

• A) lower real interest rates and an increase in aggregate demand.
• B) higher real interest rates and an increase in aggregate demand.
• C) lower real interest rates and a reduction in aggregate demand.
• D) higher real interest rates and a reduction in aggregate demand.

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Definitions:

Cash Coverage Ratio

A financial metric that measures a company's ability to cover its debt obligations with its cash and cash equivalents.

Net Income

The profit or loss of a company after all revenues, expenses, taxes, and costs have been subtracted from total revenue.

Income Tax Expense

The total amount of income tax that a company is obligated to pay to federal, state, and local tax authorities.

Earnings Per Share

A financial metric calculated by dividing the net earnings available to common shareholders by the average outstanding shares.