Question

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 increase the interest rates

C. The Fed sells bonds, increase money supply and increase the interest rates

B. The Fed sells bonds, increase money supply and increase the interest rates

D. The Fed sells bonds, decrease money supply and increase the interest rates

71)

Which of the following Investment banks made a deal with Bank of America (with full backing by the Federal Reserve)?

Merrill Lynch

Goldman Sachs

Lehman Brothers

Morgan Stanley

72)

Which of the following statements is true?

As marginal propensity to consume (b) increases, the spending multiplier decreases

As marginal propensity to consume (b) increases, the spending multiplier increases.

As marginal propensity to consume (b) decreases, the spending multiplier remains the same.

As marginal propensity to consume (b) decreases, the spending multiplier increases

74)

Potential GDP of an economy is $12 billion. Real (Actual) GDP is $20 Billion. Marginal propensity to consume is 0.75. What level of Government spending is required to achieve Full employment?

Decrease in Government spending by $2 billion

Increase in Government spending by $1 billion

Decrease in Government spending by $1 billion

Increase in Government spending by $2 billion

Answer 1