Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me with these multiple choice questions 1. Consider a closed economy model where =++, consumption is given by the function =100+0.9(), investment is

Please help me with these multiple choice questions

1. Consider a closed economy model where =++, consumption is given by the function =100+0.9(), investment is =100, government purchases are =70, and the government's budget is balanced. Which of the following is false?

a. Equilibrium disposable income is 2000.

b. Equilibrium GDP is 2070.

c. Autonomous spending is 210.

d. The multiplier is 10.

2. Which of the following statements is true?

a. In order to reduce the interest rate, the Reserve Bank conducts contractionary open market operations.

b. When interest rates fall, the price of bonds must fall.

c. Reducing the supply of money will lead to a rise in the interest rate.

d. An increase in money demand leads to a fall in the interest rate.

3. A fiscal contraction shifts the ______ curve to the left, leading to a(n) ______ in output. A monetary contraction shifts the ______ curve up, leading to a(n) ______ in output and ______ interest rates.

a. LM, increase, IS, increase, lower

b. IS, decrease, LM, increase, higher

c. LM, decrease, IS, decrease, higher

d. IS, decrease, LM, decrease, higher

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Commercial Fishing On The Outer Banks

Authors: R Wayne Gray, Nancy Beach Gray

1st Edition

1439667055, 9781439667057

More Books

Students also viewed these Economics questions

Question

1. Background knowledge of the subject and

Answered: 1 week ago