When full employment GDP = equilibrium GDP there
A. may be an inflationary gap.
B. probably is a recessionary gap.
C. may be a recessionary gap.
D. is no inflationary gap or deflationary gap.
D. is no inflationary gap or deflationary gap.
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When the Fed buys government securities
A) reserves increase, leading to a decrease in the money supply by an amount more than the purchase of the government securities. B) reserves increase, leading to a increase in the money supply by an amount more than the purchase of the government securities. C) reserves decrease, leading to a increase in the money supply by an amount more than the purchase of the government securities. D) reserves decrease, leading to a decrease in the money supply by an amount more than the purchase of the government securities.
Given the values in the table above, the real interest rate r = ________ when equilibrium output Y = 15
A) 9.8 B) 3.8 C) 3.18 D) 10 E) none of the above