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At the start of class, Professor Stevens tells students that she wants to measure how many pages of notes they take during class. At the end of the class, Professor Stevens finds that the students have taken a remarkable amount of notes—clearly more than they usually would have. Which of the following is of concern for Professor Stevens?

Financial frictions affect aggregate demand.  How so?  

Initially assume that the economy is in long-run equilibrium.  Say expected inflation falls.  As a result, real GDP will _______ in the short run and inflation will ______ in the short run, all else held constant.

Consider the market for reserves, and assume that the equilibrium federal funds rate in the market for reserves is currently between the discount rate and the interest rate paid on reserves. Say the Fed conducts an open market sale. As a result, the equilibrium federal funds rate

Which of the following is most likely to lead to inflationary monetary policy?

Assume that current output exceeds potential output.  Over time, we would expect _______ to ________, thereby causing ______ to decrease.  

Assume initially that the economy is in long run equilibrium. Unexpectedly, a negative demand shock occurs.  If the Federal Reserve responds to the shock with appropriate monetary policy, then we would expect 

Assume the following scenario:  When net taxes ______, this will cause _______ to _______, holding all else constant.  

Banks will always hold some quantity of reserves.  On any given day, a bank’s total reserves equal the sum of

One of the functions of money is that it serves as a store of value.  In the U.S., we are reasonably confident that a $20 bill will buy the same quantity of goods one month from now as it will today.  However, it is not a perfect store of value.  Why?