In a simple economy (no government sector), the equilibrium level of GDP will be less than the full employment level of income if, at the full employment level of income, the
a. saving that consumers want to do is less than investing that businesses want to do.
b. saving that consumers want to do is greater than investing that businesses want to do.
c. saving that consumers want to do is less than spending that consumers want to do.
d. inventories are being depleted.
b
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If the Fed wants to raise interest rates, then it can use its open market operations to:
a. increase the money supply. b. decrease the money supply. c. increase money demand. d. decrease money demand.
Which of the following conclusions is not supported by the Three-Sector-Model?
a. A decrease in borrowing demand causes the real risk-free interest rate to fall and equilibrium quantity of real loanable funds to rise. b. An increase in the supply of a nation's real loanable funds reduces the real risk-free interest rate and increases the equilibrium quantity of real loanable funds. c. An increase in a nation's demand for goods and services within the intermediate range results in an increase in the real GDP and a higher GDP Price Index. d. An increase in the value of a nation's currency encourages domestic imports and discourages exports. e. All of the above are supported by the Three-Sector Model.