Multiple Choice 1) Monetary policy has medium-run effects on which of the following?

Multiple Choice

1) Monetary policy has medium-run effects on which of the following?

A) the level of output but not its composition

B) both the level and composition of output

D) the nominal interest rate

D) the real interest rate

E) none of the above

2) Assume the economy is initially operating at the natural level of output. Now suppose a budget is passed that calls for a tax cut. This fiscal expansion will, in the medium run,

have NO effect on which of the following?

A) the price level

B) the interest rate

C) unemployment rate

D) all of the above

E) none of the above

3) Assume the economy is initially operating at the natural level of output. Now suppose a budget is passed that calls for a tax cut. This fiscal expansion will, in the medium run,

A) increase consumption

B) increase investment

C) decrease