Holding All Else Constant,in the Short Run,an Increase in the Money

question 11

Multiple Choice

Holding all else constant,in the short run,an increase in the money supply can cause a(n) :

• A) increase in unemployment.
• B) lower rate of inflation.
• C) decrease in the price level.
• D) decrease in real gross domestic product (GDP).
• E) increase in real GDP.

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Definitions:

Accounts Payable

The amounts a company owes to its suppliers or vendors for goods or services received but not yet paid for; a liability on the balance sheet.

Collections Float

Float created while funds from customers’ cheques are being deposited and cleared through the cheque collection process.

Disbursement Float

Float created before cheques written by a firm have cleared and been deducted from the firm’s account. Disbursement float causes the firm’s own cheque-book balance to be smaller than the balance on the bank’s records.

Net Float

The difference between a firm’s disbursement float and collections float.