Yesterday, October 24 O recessionary, inflationary, full employment recessionary, inflationary, equilibrium GDP, recessionary, full employment 237 An increase in money supply can do no change in real GDP if people have---- [a) No money illusion b) Money illusion An ability to spend more e Great memory Q.38 According to Keynesian economics, the gap between the GDP that economy actually produces and the GDP level that it is capable of producing, is called------ and it is a measure of---- in the economy. a) investment gap, unemployment b) GDP gap, unemployment c) interest gap, unemployment d) liquidity trap, employment Q.39 Fiscal policy decisions are dependent upon----- a) GDP b ) imports (M) tax revenues d) none of the above. Q. 40 According to classical economists, monetary policy should not make too many changes in money supply (adopt Laissez Faire policy) they is mainly because they believed in: a) Consumption function and equilibrium level of GDP b) quantity theory of money c) law of one price d) non effective changes in government expenditure and taxes