Question
31. If there are few excess reserves in the banking system, in the short run a sale of government securities by the Federal Reserve will
31. If there are few excess reserves in the banking system, in the short run a sale of government securities by the Federal Reserve will lead to:
lower interest rates, lower investment, and lower GDP
higher interest rates, lower investment, and lower GDP
higher interest rates, higher investment, and higher GDP
lower interest rates, higher investment, and higher GDP
32. Suppose an economy's marginal propensity to spend is .8. A autonomous shock to the economy causes investment to decline by 400. The impact on GDP will be:
a decrease of 1200
a decrease of 400
a decrease of 320
a decrease of 2000
NO EXPLANATION PLEASE
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started