The multiplier represents the ratio of the total shift in aggregate demand to the
A) initial shift in aggregate demand. B) total shift in long-run aggregate supply.
C) initial shift in short-run aggregate supply. D) total shift in short-run aggregate supply.
A
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
If the banking system has $5 million in excess reserves, and the required reserve ratio is 25 percent, what is the maximum amount by which the money supply can be increased?
a. $25 million b. $20 million c. $5 million d. $2.5 million
A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?
a. Structural b. Cyclical c. Natural d. Frictional
If technological change increases the profitability of new investment for firms, then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________
A) supply; right; fall B) supply; left; rise C) demand; right; rise D) demand; left; fall