Which statement is true?O An increase in the tax on interest rate income increasesthe supply of loanable funds and increases theequilibrium investment.O A recessionary gap means that the level of real GDP atthe short-run macroeconomic equilibrium is larger thanthe full-employment GDP.Monetary policy is preferred to fiscal policy because theuse of fiscal policy is limited due to the time lagsassociated with a fiscal policy that may cause the policyto take effect too late to solve the problem it wassupposed to address.O If the crowding out effect existed, the effects of fiscal policy could be larger.Expansionary monetary policy occurs when____O a central bank acts to decrease the money supply in an effort to stimulatethe economy.O Congress and the president decrease taxes in an effort to stimulate theeconomy.• a central bank acts to increase the money supply in an effort to stimulatethe economy.O A central bank acts to increase government spending in an effort tostimulate the economy. When the Federal Reserve increases the Federal funds rate_O both the supply of bank loans and the supply of loanable funds decrease, thereby increasing thereal interest rate.O the supply of bank loans decreases, while the supply of loanable funds and the real interest rateboth increase.both the supply of bank loans and the supply of loanable funds increase, while the real interest rateincreases.both the supply of bank loans and the supply of loanable funds increase, thereby decreasing thereal interest rate.

Answered: Image /qna-images/answer/5fd3b8be-a279-4474-a4b4-cc5557655010.jpg

Which statement is true? O An increase in the tax on interest rate income increases the supply of loanable funds and increases the equilibrium investment. O A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibrium is larger than the full-employment GDP. Monetary policy is preferred to fiscal policy because the use of fiscal policy is limited due to the time lags associated with a fiscal policy that may cause the policy to take effect too late to solve the problem it was supposed to address. O If the crowding out effect existed, the effects of fiscal policy could be larger.

Which statement is true? O An increase in the tax on interest rate income increases the supply of loanable funds and increases the equilibrium investment. O A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibrium is larger than the full-employment GDP. Monetary policy is preferred to fiscal policy because the use of fiscal policy is limited due to the time lags associated with a fiscal policy that may cause the policy to take effect too late to solve the problem it was supposed to address. O If the crowding out effect existed, the effects of fiscal policy could be larger.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 5P

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