For an economy starting at full employment real GDP, a decrease in autonomous expenditure results in a(n)
A. inflationary output gap.
B. increase in full-employment output.
C. decrease in full-employment output.
D. recessionary output gap.
Answer: D
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What is the law of one price?
What will be an ideal response?
When tax code changes reduce saving incentives, the interest rate will _____ and investment will _____
Fill in the blank(s) with correct word
Which of the following would NOT be considered a macroeconomic topic?
A) the reasons for a decline in the price of crude oil B) the cause of a downturn in the economy C) the effect of the government budget deficit on inflation D) the causes of inflation and unemployment
The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?
A. Selling government securities and raising the discount rate B. Selling government securities and lowering the discount rate C. Buying government securities and lowering the discount rate D. Buying government securities and raising the reserve ratio