A  Both fiscal and monetary policies can shift the economy's equilibrium.
     B  The LM curve is vertical in the IS-LM model and upward sloping in the Mundell-Fleming Model.
    C   The exchange rate, rather than the interest rate, changes in response to changes in the IS and LM curves in the Mundell-Fleming Model.
      D  The interest rate, rather than the exchange rate, changes in response to changes in the IS and LM curves in the Mundell-Fleming Model.

       The money supply increases causing the LM curve to shift rightward decreasing the exchange rate.
       The money supply decreases causing the LM curve to shift leftward increasing the exchange rate.
       The money supply decreases causing the IS curve to shift leftward increasing the exchange rate.
       Nothing happens. The world interest rate does not affect the domestic interest rate in the Mundell-Fleming Model.

       Net exports increase causing the exchange rate to decrease.
       Net exports decrease causing the exchange rate to increase.
       Net exports increase causing the exchange rate to increase.
       Net exports decrease causing the exchange rate to decrease.

       Output decreases and the exchange rate increases.
       Output increases and the exchange rate decreases.
       Output decreases and the exchange rate decreases.
       Output increases and the exchange rate increases.

       The equilibrium condition is the same as the floating exchange rate system in the Mundell-Fleming Model.
       With the exchange rate fixed, the money supply automatically adjusts to equilibrate.
       The Fed is responsible for ensuring that the money supply correctly equalizes the fixed exchange rate.
       The IS curve and interest rate adjust to correctly equalize the fixed exchange rate.

       is a widely accepted explanation for the upward sloping short-run aggregate supply curve.
       is where we derive the Sticky Wage Model.
       suggests that prices are slow to adjust in the short run because a high expected price level leads to a high actual price level.
       All of the above.

       When a farmer unexpectedly sees a rise in the price of asparagus, she works harder to produce more asparagus.
       When a farmer expects a rise in the price of asparagus, she increases the price of her asparagus as well.
       When a farmer expects a rise in prices in general, she raises the price of her asparagus to keep up.
       When a farmer unexpectedly sees a rise in the price of asparagus, she decreases the price of her asparagus in order to undercut the market and sell all of her asparagus at a cheaper price

       that there is a tradeoff between inflation and unemployment.
       that you cannot have inflation without unemployment and vice versa.
       the short run aggregate supply curve.
       Both 1. and 3.

       The short run aggregate supply equation implies that output deviates from its natural rate in the short run.
       The short run aggregate supply equation implies that prices deviate from their expected level the short run.
       The short run aggregate supply equation implies that prices deviate from their expected level by a factor of α in the short run.
       All of the above.

       SRAS curve; AD/AS; AD curve; AD/AS
       AD curve; AD/AS; SRAS curve; AD/AS
       IS curve; IS-LM; LM curve; Mundell-Fleming
       LM curve; IS-LM; IS curve; Mundell-Fleming

       emphasizes the importance of expectations in policy evaluation.
       argues that policy evaluation should place more emphasis on macroeconomic models.
       suggests that government should take a passive role in policy administration.
       says that people in general are stupid and irrational.

       When the economy is in a recession, increase the money supply according to the desired level of inflation.
       When the economy is in a recession, do nothing and let the economy fix itself.
       When the economy is in a recession, the Fed should buy as many bonds as it can to pull us out of the recession.
       Both 1. and 3.

       He didn't like debt and knew that the national debt would only grow with time so he advocated paying the debt off as quickly as possible.
       Because he was familiar with the time value of money, he advocated lending as much money out as possible to earn a good return on the loan.
       He suggested the country should not borrow what it could not pay back in a 20 year time span.
       He insisted on repaying the national debt that was incurred during the American Revolution despite arguments to the contrary.

       A constant real GDP.
       A constant rate of inflation.
       A constant velocity.
       Both 1. and 3.

       The inflation rate stabilizes itself in conjunction with the business cycle.
       There will always be ups and downs in the economy because it is part of the natural real business cycle.
       There is no such thing as natural real GDP nor natural unemployment rate.
       None of the above.

       has a concerning level of national debt according to international law.
       is measuring its debt to Real GDP ratio incorrectly.
       is nowhere near its debt limit in economic terms.
       has one of the highest debt to Real GDP ratios in the world.

       the exchange rate decreases.
       the US depletes its gold reserves.
       government spending exceeds revenue.
       None of the above.

       cut taxes to increase consumption and subsequently real GDP.
       provide a stimulus to increase government spending and consumption and subsequently real GDP.
       stop selling US government bonds to foreign countries.
       None of the above.

       When a consumer knows they will lose their job next week, they stop spending today and save for expenses next week.
       When a consumer gets a raise, they immediately consume the additional income and do not save for the future.
       When a consumer gets a raise, they immediately put the additional income into savings and do not consume more than they need. 
       A consumer maximizes their consumption, which subsequently maximizes their savings as well.

       United States
       Portugal
       Netherlands
       Japan