_ 180. Equilibrium real GDP is
a. independent of the price level
b. determined solely in the loanable funds market
c. controlled by the Fed
d. directly related to the interest rate
e. the level of output at which total spending equals total output for a g
somewhat by decreases in the interest rate
b. decrease real GDP because of the increases in the price level and increases in the interest
c. decrease real GDP because of the multiplier effect and increase in the interest rate, but be
_ 242. Why doesn't the Fed eliminate inflation from the economy entirely?
a. It is incapable of doing so.
b. It believes that inflation is bad for the economy.
c. It believes that the measured inflation rate understates the true rate of inflation.
d. It r
d. Increases in government purchases, investment spending, autonomous consumption or
e. Decreases in government purchases or investment spending, and increases in autonomous
consumption, taxes, or the money supply.
_ 188. Wages often respond slowly
_ 230. If the Fed responds to an increase in government spending with the goal of stable prices and output, which of
the following would be the result?
a. A larger multiplier effect than normal
b. Partial crowding out
c. An increase in consumption and inv
c. Increases in government spending.
d. Monetary policy.
e. Decreases in government spending.
_ 218. If output is below the full-employment level of output, we should expect wages to increase over time.
_ 219. After a positive demand shoc
_ 205. In the long run, changes in equilibrium GDP are most likely to be caused by
a. changes in full-employment output
b. open market operations by the Fed
c. changes in nominal wages
d. contractionary or expansionary fiscal policy
e. none of these; long
the Federal Reserve was created
the federal government started insuring banking deposits
the Federal Reserve increased the required reserve ratio
the Federal Reserve started using open market operations
the Federal Reserve decided to take a
c. are helpful in monetizing the federal debt
d. stimulate purchases of consumer durables
e. stimulate spending at many levels
_ 164. In the classical model the interest rate is determined in the money market; in the short-run macro model the
10 percent and $500 billion
8 percent and $500 billion
6 percent and $500 billion
8 percent and $750 billion
6 percent and $750 billion.
_ 152. People's decision about whether to hold money or bonds can be influenced by the interest rate.