Suppose We Are at a Long-Run Equilibrium Point in an AD-AS

question 75

Multiple Choice

Suppose we are at a long-run equilibrium point in an AD-AS model.Then the money supply increases.In the short run,is there any difference between what happens in the simple quantity theory of money (SQTM) version and the monetarist version of the model?

• A) There is no difference.
• B) In the SQTM version,the price level rises; in the monetarist version,it does not.
• C) In the monetarist version,the price level falls; in the SQTM version,it does not.
• D) In the monetarist version,the Real GDP rises; in the SQTM version,it does not.
• E) In the SQTM version,Real GDP falls; in the monetarist version,it does not.

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Definitions:

Equal Payments

Regular payments of the same amount over a specified period, often used in loan repayment or investment plans.

Compounded Monthly

Interest calculated on the principal sum and also on the accumulated interest of previous periods of a deposit or loan, compounded every month.

Equal Payments

Payments that are the same in amount, typically referring to installments paid over a certain period of time.

Outstanding Balance

the amount of money that is still owed or remains unpaid on a loan, credit card, or another financial obligation.