Beginning from a position of long-run equilibrium, suppose there is an increase in the aggregate demand curve. After adjustment and comparing the economy's new long-run equilibrium with its original long-run position, the result would be an increase in:
a. real GDP.
b. the price level (CPI).
c. the unemployment rate.
d. a and b, but not c.
Question 2
Best National Bank operates with a 20 percent required reserve ratio. One day a depositor withdraws 500 from his or her checking account at this bank. As a result, the bank's excess reserves:
a. fall by 500 b. fall by 400.
c. rise by 100 d. rise by 500.
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