1. Aggregate supply is the quantity of:
a- output the country wants at each level of inflation.
b- real output supplied at each level of real interest rate.
c- real output supplied at each level of inflation.
d- nominal output supplied at each level of inflation.
2. If the slope of the monetary policy reaction curve is relatively flat, it means that central bankers are:
a- not concerned at all about inflation.
b- very concerned about keeping inflation close to the target rate.
c- not going to let inflation deviate from its target at all.
d- less concerned about keeping inflation close to its short-run target.
3. If a point lies on the monetary policy reaction curve, and at this point the inflation rate equals the target rate of inflation, we know that:
a- the real interest rate corresponding to this point is below the long-run real interest rate.
b- the real interest rate corresponding to this point is above the long-run real interest rate.
c- current output is above potential output.
d- the real interest rate corresponding to this point is equal to the long-run real interest rate.
4. It has been argued that the information technology age has greatly increased productivity and potential output. If this is true:
a- we should have seen lower short-run interest rates than we have seen.
b- nominal long-run interest rates should have increased.
c- the long-run real interest rate is also higher as a result.
d- the long-run real interest rate is lower as a result.