If actual Real GDP is less than the full employment Real GDP, then the (actual)

Question

If actual Real GDP is less than the full employment Real GDP, then the (actual) unemployment rate is

Question 1 options:

less than the natural unemployment rate and a recessionary gap exists.

equal to the natural unemployment rate and no gap exists.

less than the natural unemployment rate and an inflationary gap exists.

greater than the natural unemployment rate and an inflationary gap exists.

greater than the natural unemployment rate and a recessionary gap exists.

Which of the following actions is most likely to lead to an increase in the money supply?

Question 2 options:

Fed purchases of government securities

an increase in the required-reserve ratio

an increase in the discount rate

none of the above

less than the natural unemployment rate and a recessionary gap exists.

equal to the natural unemployment rate and no gap exists.

less than the natural unemployment rate and an inflationary gap exists.

greater than the natural unemployment rate and an inflationary gap exists.

greater than the natural unemployment rate and a recessionary gap exists.

Which of the following actions is most likely to lead to an increase in the money supply?

Question 2 options:

Fed purchases of government securities

an increase in the required-reserve ratio

an increase in the discount rate

none of the above

Explanation / Answer

1. greater than the natural unemployment rate and a recessionary gap exists.

2. Fed purchases of government securities. When Fed will buy back Government securities from public, money will go in hands of public

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