The economy is in equilibrium, TP = TE, and Real GDP is $4,555 billion. The MPC is 0.80, the multiplier is operative, and idle resources exist at each expenditure round. Government purchases rise by $10 billion. As a result, the __________ curve shifts __________, inventory levels unexpectedly __________, business firms ___________ the quantity of goods and services they produce, and Real GDP __________ by __________.
| a. TE; downward; fall; increase; rises; $10 billion. | | |
| b. TP; rightward; fall; decrease; falls; $50 billion | | |
| c. TE; upward; fall; increase; rises; $50 billion | | |
| d. TE; downward; rise; increase; rises, $50 billion Bank A has checkable deposits of $900,000 and total reserves of $112,000. If the required reserve ratio is 8 percent, the bank has excess reserves of | | | | d. $4,000 A tariff is imposed on strawberries. The tariff will ___________ the price of strawberries in the domestic market, _____________ the quantity of strawberries imported in the domestic market, and ____________ consumersâ surplus. | | | | d. lower; lower; raise The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent with this state of affairs? | a. The economy will soon self-regulate and produce Natural Real GDP. | | | | b. Expansionary fiscal policy will be effective at removing the economy from the recessionary gap. | | | | c. If expansionary fiscal policy is implemented, the AD curve will shift to the right, and eventually the price level and Real GDP will rise. | | | | | e. none of the above When Bank A obtains a loan from the Fed, the | a. discount rate is probably higher than the federal funds rate. | | | | b. bankâs reserves increase. | | | | c. simple deposit multiplier decreases. | | | | | | | | | | | | |