Crowding Out

In a recession, where is short-run equilibrium relative to long-run equilibrium?

• below long-run equilibrium

• at long-run equilibrium

• above long-run equilibrium

• short-run and long-run equilibrium are always the same

How will Congress respond to excessive unemployment?

• raising taxes

• cutting spending

• cutting transfers

• raising transfers

Expansionary fiscal policy has what affect on Money Demand?

• it increases

• it decreases

• unchanged

• expansionary fiscal policy changes Money Supply

An increase in the Money Demand has what effect on interest rates?

• increases

• decreases

• remains unchanged

• they are unrelated

Nominal interest rates decreasing can causes Gross Investments to

• increase

• decrease

• stay the same

• they are unrelated

Where do banks get the ability to lend from?

• public deposits and savings

• public withdrawals

• congress

• interest rates

When people do not spend their money this is called

• savings

• dissavings

• debt

• deficit spending

What changes Money Demand?

• C & G

• the velocity of money

• The Federal Reserve

• The Board of Governors

What changes the Supply of Loanable Funds

• consumption and savings

• ceilings and floors

• frontiers and GDP gaps

• the CPI and the PPI

What changes the Demand for Loans?

• borrowing

• savings

• the misery index

• the FOMC