Cetcrus paribus, in the AD/AS/IS/LM model, the immediate short-term effect of a
ID: 1208715 • Letter: C
Question
Cetcrus paribus, in the AD/AS/IS/LM model, the immediate short-term effect of a decrease in the marginal productivity of labour function. Perhaps caused by an increase in the price of oil, is to increase real income and the price level. to decrease real income and the price level. to increase real income and investment. to decrease real income and increase the price level. Assume that the required reserve ratio is 25 percentage. If the Fed buys from a bank dollar 85 million worth of government bonds (that is, loans made to the Fedora! government by bank), the maximum change in tin' money supply is: dollar 125 million. 1.25 million. less than 5 million. more than 5 million. 2. When the economy is in a liquidity trap, one way to get the economy out of a recession is too: expand the money supply. contract the money supply. increase government expenditures. increase taxes. Carter Glass is associated in various ways with (a) the Glass-Steagall act. the foundation of the Fed. Connie Britton. all of the above. Supjxise the Central Bank of New Genoland decides to increase the country's money by 15 percentage immediately and every .war for the foreseeable future. Firms and workers in New Genoland expect this increase to the money supply and immediately raise all prices and wages by 15 percentage and plan to do so every year. Which of the following would be true of the economy of New Geneland under the AD/AS/IS/LM model? The LM curve would shift out. The AD curve would shift in. Output would increase. The nominal interest rate would rise.Explanation / Answer
20. Option D is correct.
With a decrease in MPL and increase in price level of oil, the supply curve would shift to the right. As a consequence, the price level in the economy would rise and hence real income which is adjusted for inflation in the nominal income would fall.
21. The multiplier = 1/required reserve.
Multiplier = 1/0.25 or = 4.
Money supply = multiplier*change in reserves.
Money supply = 4*5 = $20 million.
Hence option D is correct.
22. Option C is correct.
When the economy is in a liquidity trap, the interest rates are so low that people rather hold money than to invest. Thus to move the economy output of recession, the exapnasionary fiscal policy workes the best, as an increase in government spending would not crowd out the private investment and the fiscal policy would be completely effective in increasing the output.
23. Option A is correct.
He is associated with glass steagall act of 1932 and 1933.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.