Suppose the Fed sells $500 billion in government securities, which results in a $5000 billion decrease in the money supply. In the long run, the decrease in the money supply will cause the price level in the economy to __________ and real GDP to ___________. Options: remain unchanged; decrease; increase Thank you

Suppose the Fed sells $500 billion in government securities, which results in a $5000 billion decrease in the money supply. In the long run, the decrease in the money supply will cause the price level in the economy to and real GDP to _. Options: remain unchanged; decrease; increase Thank you

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 11E

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Now consider an economy in which the government lowers its spending. In the long run, the result would be _____________ in the price level and _____________ in real output. an increase; an increase a decrease; no change a decrease; a decrease None of the listed options is correct. no change; a decrease
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137.) If residents are myopic, an increase in “worthless” government spending, financed by higher current taxes will cause Lower output and higher prices in the short run A rise in aggregate demand, and thus higher output in the long run A decrease in aggregate demand None of the above
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