Starting from a Position of Macroeconomic Equilibrium at the Full-Employment

question 110

Multiple Choice

Starting from a position of macroeconomic equilibrium at the full-employment level of real GDP, in the short run, an unanticipated decrease in the money supply will:

• A)​raise real interest rates, lower the price level, and reduce real GDP.
• B)​raise real interest rates, lower the price level, and leave real GDP unchanged.
• C)​raise nominal interest rates, lower the price level, and leave real GDP unchanged.
• D)​lower real interest rates, raise the price level, and increase real GDP.

---

Definitions:

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the cost and risk of shipping as soon as the goods leave the seller's premise.

Perpetual Inventory System

An inventory accounting system where updates are made continuously as transactions occur, providing a real-time inventory balance.

Selling and Administrative Expenses

Costs related to selling products and managing the business, excluding production costs.

Multiple-Step Income Statement

An income statement that separates operating revenues and operating expenses from non-operating revenues, expenses, and other gains and losses.