Looking at the Macroeconomic Statistics for Friedmanland,you Discover That at the Beginning

question 87

Multiple Choice

Looking at the macroeconomic statistics for Friedmanland,you discover that at the beginning of the year,the national money supply was equal to $400 million and by the end of the year it was equal to $420 million.You also found out that the inflation rate in Friedmanland was 7%.In this case,you would expect the LM curve to

• A)shift up and to the left as the real money supply falls.
• B)shift up and to the left as the real money supply rises.
• C)shift down and to the right as the real money supply falls.
• D)shift down and to the right as the real money supply rises.

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Definitions:

CPI

Consumer Price Index, which measures the average change over time in the prices paid by consumers for a market basket of consumer goods and services.

Social Security Payments

These are government payments made to qualifying individuals, such as the elderly or disabled, to help support their income.

Indexed

Adjusted or linked to a specific index or a standard measurement, commonly used to maintain purchasing power or adjust for inflation.

Price Index

A statistical measure that examines the weighted average of prices of a selected basket of goods and services over a period, used to track inflation or deflation.