Question: how would you answer these 6. The aggregate demand curve is negatively related to prices because higher prices the real money supply, which the interest

 how would you answer these 6. The aggregate demand curve is

how would you answer these

negatively related to prices because higher prices the real money supply, which

6. The aggregate demand curve is negatively related to prices because higher prices the real money supply, which the interest rate (nominal and real) and this in turn consumption, investment and net exports. a. raise, reduces; increases. b. raise; increases; decreases. c. reduces; reduces; increases. d. reduces; increases; decreases 11. If the Fed reduces money supply, then in the short run: a. mterest rate rises but exchange rate falls. | T b. exchange rate rises and net exports fall. c. interest rate falls, but the level of investment does not rise. d. exchange rate falls, but net exports do not rise. 14. Large persistent government budget deficits may have various effects on the economy. Which of the following would be one of their potential effects? a. encourage excessively expansionary monetary policy. b. increase the risk of government default risk. c. raise the interest rate. d. discourage investment and hence reduce growth e. All of the above

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