Question

1. In the short run, an expansion in Europe causes U.S. exports and aggregate demand to ___________and the unemployment rate to _____________.

In the short run, a decrease in the money supply causes the price level and inflation to _____________

In the short run, an increase in the money supply causes output to _______­­­­___.

In the short run, an increase in the money supply causes the price level and inflation to ___________

The answers are increasing or decreasing

Answer 1

In the short run, an expansion in Europe causes U.S exports toand aggregate demand to decrease and the unemployment rate to increase. ( Expansion in the short run will increase money supply in the market of Europe which stimulates the economy and GDP increases which injects more investment in the domestic market and higher trade barriers for imported items in order to save the local production system. This will affect on the demands of foreign goods as the price of the imported items will rise after heavy trade barriers affecting the export of US and unemployment will rise due to losses in the export trade of the country.)

In the short run, a decrease in the money supply causes the price level and inflation to decrease. ( When theer is a decrease of money supply in the short run, people and firms will hold less money which make them spend less leading to the decrease in aggregate demand and reverse is the case when the money supply increase in the short run.)

In the short run, an increase in the money supply causes output to increase.

In the short run, an increase in the money supply causes the price level and inflation to increase .