Question : 121) The proposition of long-run neutrality of money supported by : 1384464

121) The proposition of long-run neutrality of money is supported by evidence over more than fifty years and many countries that there is a positive relationship between

A) money supply growth and real GDP.

B) money supply growth and interest rates.

C) potential GDP and money supply growth.

D) inflation rates and interest rates.

E) inflation rates and money supply growth.

122) Other things being equal, the steeper the AS curve for the economy, the

A) larger the impact on real output from any given increase in the money supply.

B) more sensitive the aggregate expenditure function to changes in the interest rate.

C) larger the impact on the price level from any given increase in the money supply.

D) less sensitive the aggregate expenditure function to changes in the interest rate.

E) smaller the impact on the price level from any given increase in the money supply.

123) Other things being equal, the flatter the AS curve for the economy, the

A) smaller the impact on real output from any given increase in the money supply.

B) more sensitive the aggregate expenditure function to changes in the interest rate.

C) larger the impact on the price level from any given increase in the money supply.

D) less sensitive the aggregate expenditure function to changes in the interest rate.

E) smaller the impact on the price level from any given increase in the money supply.

124) Consider the monetary transmission mechanism. Other things being equal, the steeper is the investment demand function, the

A) more responsive is desired investment to a change in the interest rate.

B) less responsive is desired investment to a change in the interest rate.

C) less responsive is the interest rate to a change in the money supply.

D) more responsive is the demand for money to a change in the interest rate.

E) less responsive is the demand for money to a change in the interest rate.

125) Consider the monetary transmission mechanism. Other things being equal, the flatter is the investment demand function, the

A) more responsive is desired investment to a change in interest rates.

B) less responsive is desired investment to a change in interest rates.

C) less responsive is the interest rate to a change in the money supply.

D) more responsive is the demand for money to a change in interest rates.

E) less responsive is the demand for money to a change in interest rates.

126) Consider the monetary transmission mechanism. If the Bank of Canada were to increase the money supply, we would expect a large increase in aggregate demand if the money demand function

A) and the investment demand function are relatively flat.

B) and the investment demand function are relatively steep.

C) is relatively flat and the investment demand function is relatively steep.

D) is relatively steep and the investment demand function is relatively flat.

E) remains the same and the investment demand function is steep.

127) The effectiveness of monetary policy in bringing about changes in real GDP is enhanced when the

A) investment demand curve and money demand function are both relatively flat.

B) investment demand curve and money demand function are both relatively steep.

C) investment demand curve is relatively steep and the money demand function is relatively flat.

D) investment demand curve is relatively flat and the money demand function is relatively steep.

E) None of the above – monetary policy is always equally effective.

128) Monetary policy can have the largest impact on desired aggregate expenditures when the

A) investment demand curve and money demand function are both relatively flat.

B) investment demand curve and money demand function are both relatively steep.

C) investment demand curve is relatively steep and the money demand function is relatively flat.

D) investment demand curve is relatively flat and the money demand function is relatively steep.

E) None of the above – monetary policy is always equally effective.

129) Monetary policy will be least effective in changing aggregate demand when the

A) investment demand curve and money demand function are both relatively flat.

B) investment demand curve and money demand function are both relatively steep.

C) investment demand curve is relatively steep and the money demand function is relatively flat.

D) investment demand curve is relatively flat and the money demand function is relatively steep.

E) None of the above – monetary policy is always equally effective.

130) Consider the monetary transmission mechanism. A relatively steep investment demand curve and a relatively flat money demand curve

A) make it impossible for the Bank of Canada to change the money supply.

B) increase the effectiveness of expansionary monetary policy.

C) imply that large increases in the money supply have little effect on aggregate expenditure.

D) make the money supply a particularly powerful policy instrument.

E) are believed by many monetarists to be realistic descriptions of the economy.