When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

In the Keynesian model, the larger the marginal propensity to consume, the:

a. larger the multiplier. b. larger the marginal propensity to save. c. higher the income level of the economy. d. smaller the change in income derived from a given change in government spending.

When the Fed purchases more bonds and, thereby, increases the money supply, the initial effects of the more expansionary monetary policy will often be weakened as a result of

a. lower nominal interest rates and a decline in the velocity of money. b. higher nominal interest rates and a decline in the velocity of money. c. higher nominal interest rates and an increase in the velocity of money. d. lower real interest rates and an increase in the velocity of money.