17) If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it, ________.
A) monetary policy would ultimately lead to higher potential output but real interest rates and inflation would be unaffected in the long run
B) monetary policy would ultimately lead to higher inflation but real interest rates and potential output would be unaffected in the long run
C) monetary policy would ultimately lead to higher interest rates but potential output and inflation would be unaffected in the long run
D) monetary policy would ultimately lead to higher interest rates, potential output, and inflation in the long run
18) A federal government deficit is said to exist in the event that ________.
A) federal outlays are less than federal revenues.
B) federal outlays are equal to federal revenues.
C) federal outlays are greater than federal revenues.
D) any of the above conditions exists.
19) Private saving + Government saving equals ________.
A) Taxes + Investment
B) Output minus Consumption
C) Government capital + human capital
D) Investment + Net exports
17) If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it, ________.
A) monetary policy would ultimately lead to higher potential output but real interest rates and inflation would be unaffected in the long run
B) monetary policy would ultimately lead to higher inflation but real interest rates and potential output would be unaffected in the long run
C) monetary policy would ultimately lead to higher interest rates but potential output and inflation would be unaffected in the long run
D) monetary policy would ultimately lead to higher interest rates, potential output, and inflation in the long run
18) A federal government deficit is said to exist in the event that ________.
A) federal outlays are less than federal revenues.
B) federal outlays are equal to federal revenues.
C) federal outlays are greater than federal revenues.
D) any of the above conditions exists.
19) Private saving + Government saving equals ________.
A) Taxes + Investment
B) Output minus Consumption
C) Government capital + human capital
D) Investment + Net exports
