Suppose the Economy Is Initially in Long-Run and Short-Run Equilibrium

question 80

Multiple Choice

Suppose the economy is initially in long-run and short-run equilibrium.If the Bank of Canada decides to pursue a contractionary monetary policy,we will see

• A)bond prices fall,interest rates fall,aggregate demand remain unchanged as consumption spending decreases,but investment spending increases.Real national income remains constant in both the short run and the long run,but the price level falls in both.
• B)bond prices fall,interest rates rise,aggregate demand fall as investment and consumption spending decrease,and real national income and the price level decreasing in the short-run,but only the price level decreasing in the long run.
• C)bond prices fall,interest rates rise,aggregate demand falls as investment spending decreases and consumption spending remains unchanged,and real national income and the price level decrease in the short run,but only the price level fall in the short run.
• D)interest rates rise but no change in bond prices.Aggregate demand falls as consumption spending and investment spending decrease,and the price level and real national income fall in both the short run and the long run.

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Definitions:

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Referring to a male who has not undergone circumcision, meaning the foreskin covering the head of the penis has not been removed.

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Cleaning the genitals and anal area to prevent infection, often part of personal hygiene or postoperative care routines.