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:

Population Correlation

A measure of the strength and direction of association that exists between two variables measured across an entire population.

Alternative

In hypothesis testing, this refers to the hypothesis that contradicts the null hypothesis, suggesting some effect or difference exists.

Null Hypothesis

In statistical testing, it is the assertion that there is no effect or no difference, used as a default hypothesis to challenge with experimental evidence.

Confidence Interval

An estimated range of values derived from sample data that is likely to contain the value of an unknown population parameter, expressed at a specified level of confidence.