If the Monetary Authorities Decide to Increase the Nominal Money

question 11

Multiple Choice

If the monetary authorities decide to increase the nominal money supply by 10% when the economy is at its full-employment level of output, in the long run the aggregate price level increases by _____% and real GDP _____.

• A) 10; increases by 10%
• B) 5; increases by 5%, according to Okun's law
• C) 10; returns to the potential level of output
• D) 5; increases by 20%, given a marginal propensity to consume of 0.5

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Definitions:

Ionized Calcium

The fraction of calcium in the blood that is not attached to proteins, important for many body functions including muscle contraction and blood clotting.

Lactic Acid

A metabolic byproduct produced by the body during anaerobic respiration, contributing to muscle fatigue and soreness post-exercise.

Distal Pulse

A pulse taken far from the trunk of the body, such as at the wrist or foot, indicating the flow of blood to these areas.

Venipuncture

A medical procedure that involves puncturing a vein with a needle to draw blood or to give medications.