The Fed can close a recessionary gap by _____
Group of answer choices
selling U.S. government bonds.
increasing fiscal expenditure.
lowering the interest rate.
increasing taxes.
decreasing taxes.
Ans) the correct option is c) lowering the interest rate.
Fed can lower the interest rate to close the recessionary gap.
The Fed can close a recessionary gap by _____ Group of answer choices selling U.S. government...
The Fed can directly protect a bank during a bank run by Group of answer choices increasing reserve requirements lending reserves to the bank doing any of the above selling government bonds to the bank.
1) Suppose that the national economy is experiencing a recession with an estimated recessionary gap of $10 billion. Congress is considering the use of fiscal policy to ease the recession, and due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $3 billion. The government wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $3 billion is approved and the MPC...
From 1990 to 1995, the U.S. economy was in a recessionary gap. According to the classical economists, which of the following should have occurred? Group of answer choices all of the above should have occurred wages should have fallen which would cause more workers to be hired prices should have fallen which would increase consumer spending interest rates should have fallen which would increase consumer and investment spending
1. Traditional monetary policy is conducted by managing : Group of answer choices the prime rate. mortgage rates. the federal funds rate. the discount rate. 2. What is required to achieve the Federal Reserve's broad goal of achieving a safer, more flexible financial system? Group of answer choices Safe and sound financial institutions A strong infrastructure for payments Both A and B Congressional oversight of the banking system. 3. A unified national currency was established and a heavy tax was...
Which of the following is an example of an expansionary fiscal policy? a. The US government increasing corporate taxes b. The US government lowering spending in order to balance the budget c. The US government lowering corporate and individual taxes d. The Fed lowering interest rates Which of the following is an example of contractionary monetary policy? a. The Fed conducting open market purchase b. The Fed conducting open market sale c. The US government increases taxes d. The Fed...
1. If the government imposes a price ceiling, then: Group of answer choices producers would be inclined to increase the quantity supplied. producers must charge the ceiling price. the price offered by producers must be at or below the ceiling price. the market supply curve will shift to the right. the price offered by producers must be at or above the ceiling price. 2. If foreign exchange rates are determined by the interaction of supply and demand forces for the...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
If the government increases income taxes, Group of answer choices government spending declines and real output increases consumption increases and real output increases real output remains the same consumption decreases and real output increases Economic expansions in Europe and China would cause Group of answer choices the U.S. price level and real GDP to remain unchanged. the U.S. price level and real GDP to rise. the U.S. price level to fall and real GDP to rise. the U.S. price level...
69) Which of the following conditions describes a recessionary gap? The short-run equilibrium level of real GDP is below the potential GDP The short-run equilibrium level of real GDP is above the potential GDP The actual interest rate is below the equilibrium interest rate The actual interest rate is above the equilibrium interest rate 70) Question 701 pts Which of the following statements is completely true regarding a contractionary monetary policy? A. The Fed buys bonds, increase money supply and...
Currently, a government's budget is balanced. The marginal propensity to consume is 0.80. The government has determined that each additional $10 Billion in new government debt it issues to finance a budget deficit pushes up the market interest rate by 0.1 percentage point. It has also determined that every 0.1 percentage point change in the market interest rate generates a change in investment expenditures equal to $2 Billion. Finally, the government knows that to close a recessionary gap and take...