In the open-economy macroeconomic model, the market for loanable funds equates national saving with

Pat gives up a $40,000 per year job to stay at home and take care of the house. By so doing, Pat saves $15,000 in child care and house cleaning services which he now performs himself. The direct effect on GDP from Pat's decision is a decrease of

A) $25,000. B) $15,000. C) $30,000. D) $40,000. E) $55,000.

The lag between changes in the Fed's interest rate target and large responses of output means that the Fed may want to ________ interest rates ________ output recovers to its natural level

A) raise, after B) lower, before C) raise, before D) lower, after