When Something Happens to the Economy, Monetarists Ask Two Questions

question 74

Multiple Choice

When something happens to the economy, monetarists ask two questions:

• A)What does this do to government spending, and what does it do to tax revenues?
• B)What does this do to real GDP, and what does it do to the price level?
• C)What does this do to investment spending, and what does it do to net exports?
• D)What does this do to the money supply, and what does it do to velocity?

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Definitions:

Short-Run Aggregate Supply Curve

A curve that represents the relationship between the total production of goods and services and the price level for output in the short-run.

Price Level

A measure of the average prices of goods and services in the economy.

Economic Conditions

The state of a country or region in terms of production, employment, and prices, and how these factors influence economic activities.

Aggregate Demand

Aggregate desire for goods and services within an economy at different price points, during a certain period.