1. Which of the following statements is true regarding the ability of the Federal Reserve to manipulate the level of real GDP?

a.The Fed is always able to stimulate a weak economy but may have trouble slowing down a strong, booming economy

b.The Fed is always able to stimulate a weak economy

c.The Fed is better at slowing down a booming economy than it is at stimulating a weak economy

d.The Fed has never been able to slow down a booming economy

2.The fiscal policy that will give us the largest multiplier in a bad recession will occur when the dollars used to finance the policy

a.Come from idle balances

b.Come from taxes that are timely, targeted and temporary

c.Are spent on imports

d.Come from corporations rather than from households