Refer to Figure 10.4. Suppose the economy's equilibrium starts out with an output gap of 1, and real GDP increases so the output gap increases to 2
If the Fed keeps the money supply constant, money demand will ________ and the nominal interest rate will ________. A) increase; increase
B) increase; decrease
C) increase; remain constant
D) remain constant; remain constant
A
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Credit unions ________
A) acquire access to funds by accepting deposits then use these monies in lending to households and firms B) are a special type of mutual fund C) raise funds by selling commercial paper then lend these funds to consumers D) acquire access to monies through the payment of premiums by employees
Jane's utility function is represented as: U = F0.5 C0.5, F is quantity of food and C is quantity of clothing. If her budget constraint is represented as: 120 = 2F + C, her optimal bundle of consumption should be
A) (40F, 40C). B) (20F, 60C). C) (50F, 50C). D) (45F, 20C).