An increase in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate.
A) increases; decreases B) decreases; decreases
C) decreases; increases D) increases; increases
Ques. 2Refer to Table 27-4. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy.
If Congress and the president use fiscal policy successfully to keep real GDP at its potential level in 2017, which of the following will be lower than if Congress and the president had taken no action?
A) potential GDP and the inflation rate B) real GDP and the unemployment rate
C) real GDP and potential GDP D) real GDP and the inflation rate
Ques. 3Equilibrium GDP is equal to
A) autonomous expenditure times the multiplier.
B) autonomous expenditure times the marginal propensity to consume.
C) autonomous expenditure times the marginal propensity to save.
D) autonomous expenditure.
Ques. 4Refer to Table 27-3. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy.
If Congress and the president use fiscal policy successfully to keep real GDP at its potential level in 2017, which of the following will be higher than if Congress and the president had taken no action?
A) real GDP and the unemployment rate B) potential GDP and the inflation rate
C) real GDP and the inflation rate D) real GDP and potential GDP
Ques. 5The recession of 2007-2009 decreased the demand for imports in Japan, which caused the ________ curve for the yen to shift to the ________, increasing the exchange rate and the value of the yen.
A) demand; left B) supply; right C) supply; left D) demand; right
Ques. 6Refer to Table 27-2. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy.
If Congress and the president want to keep real GDP at its potential level in 2017, they should
A) decrease the discount rate. B) decrease government purchases.
C) conduct expansionary fiscal policy. D) buy Treasury securities.
Ques. 7What impact does a higher price level have on interest rates, wealth, and investment spending?
What will be an ideal response?
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