Question : 41) A leftward shift of the AD curve accompanied by : 1384481

41) A leftward shift of the AD curve accompanied by a rightward shift of the AS curve will

A) increase unemployment but have an uncertain effect on the price level.

B) reduce unemployment but have an uncertain effect on the price level.

C) increase the price level but have an uncertain effect on unemployment.

D) reduce the price level but have an uncertain effect on unemployment.

E) increase both the price level and unemployment.

42) A rightward shift of the AD curve accompanied by a rightward shift of the AS curve will

A) increase GDP but have an uncertain effect on the price level.

B) reduce GDP but have an uncertain effect on the price level.

C) increase the price level but have an uncertain effect on GDP.

D) reduce the price level but have an uncertain effect on GDP.

E) reduce both the price level and GDP.

43) If the central bank responds to repeated negative supply shocks with monetary validations, the economy will be faced with

A) a one-time increase in prices.

B) a one-time decrease in prices.

C) alternating periods of inflation and deflation.

D) steady reductions in real output.

E) continuous inflation.

44) Suppose the economy is currently in long-run equilibrium with real GDP equal to potential GDP. A positive demand shock, that is not validated by the Bank of Canada, will eventually result in

A) no change in the price level.

B) an ongoing inflation in the economy.

C) a lower price level and real GDP below potential output.

D) a higher price level and GDP at potential output.

E) an ongoing deflation in the economy.

45) Suppose there is an inflationary gap and the Bank of Canada does not respond in any way to change its monetary policy. This scenario will lead to

A) an increase in wages and an upward shift of the AS curve.

B) a wage-price spiral.

C) a permanent decrease in output.

D) the emergence of a recessionary gap.

E) reduced transactions demand for money, an increase in the price of bonds, and a lower rate of interest.

46) Suppose there is a recessionary gap and the Bank of Canada holds the money supply constant. This scenario will eventually lead to

A) an increase in wages and an upward shift of the AS curve.

B) a reduction in wages and a downward shift of the AS curve.

C) a permanent decrease in output.

D) the emergence of an inflationary gap.

E) increased transactions demand for money, and a higher rate of interest.

47) Beginning from a position of long-run equilibrium, an expansionary monetary policy by the Bank of Canada causes

A) aggregate demand for goods and services to exceed potential output.

B) aggregate demand for goods and services to fall short of potential output.

C) an increase in most market interest rates.

D) a fall in the general price level.

E) an increase in the level of potential output.

48) Beginning from a position of long-run equilibrium, a contractionary monetary policy by the Bank of Canada causes

A) aggregate demand for goods and services to exceed potential output.

B) potential output to exceed aggregate demand for goods and services.             

C) a fall in most market interest rates.

D) an increase in the general price level.

E) an increase in potential output.

49) Assume that an economy is currently in long-run equilibrium at its potential output and that it is subjected to a positive demand shock. When the economy moves back to producing its potential level of national income, the price level will be

A) equal to what it was originally before the demand shock.

B) lower than it was in short-run equilibrium and the lower than it was originally.

C) lower than it was in the short-run equilibrium but higher than it was originally.

D) higher than it was in the short-run equilibrium but lower than it was originally.

E) higher than it was in the short-run equilibrium and even higher than it was originally.

50) Assuming that the economy is currently in a long-run equilibrium with real GDP equal to Y*, a positive AD shock (with no change in the money supply) will eventually result in

A) no change in the price level.

B) an ongoing inflation in the economy.

C) a lower price level and GDP below its potential level.

D) a higher price level and GDP at its potential level.

E) a lower price level and GDP at its potential level.