Refer to Figure 15-2. In the dynamic model of AD-AS in the figure above, if the

Question

Refer to Figure 15-2. In the dynamic model of AD-AS in the figure above, if the economy is point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is then at point B. The unemployment rate is very low. Firms are operating above capacity the economy is below full employment income and profits are rising there is pressure on wages and price to rise Multiplier effect from tax cut is smaller than the multiplier effect from increase in government purchase because tax multiplier is negative some government purchases are saved and not used for spending by the government. some of the tax cut is saved and not used for consumption by the households. government purchases is considered as autonomous expenditure. None of the above The federal funds rate is the interest rate the Fed charges commercial banks. the interest rate a bank charges its best customers. the interest rate banks charge each other for overnight loans. the interest rate on a Treasury Bill. None of the above An equal increase in government purchases and taxes will cause an increase in real GDP. no change in real GDP. an increase in the budget surplus. a reduction in cyclically adjusted budget surplus. None of the above decrease in the money supply raises the interest rate because there is excess supply for money. money supply is completely determined by the Fed. demand for short-term interest paying securities decrease. demand for short-term interest paying securities increase. None of the above Which of the following is not a correct statement? invention of money led to specialization. Money can facilitate trade loans are considered as assets in the bank's balance sheet reserves are consider as assets in the bank's balance sheet. None of the above.

Explanation / Answer

23) please share the figure 15.2

24) (C) The tax cut leads to increased saving and consumption while government expenditure has a direct effect on aggregate demand

25(c) The federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

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