In the coordination failure model, how is a particular equilibrium attained?
A) The Federal Reserve picks it.
B) It depends on total factor productivity shocks.
C) It depends on money supply shocks.
D) because people expect it to be the equilibrium.
Question 2
Other things equal, the higher the interest rate paid on term deposits, the ________ funds that are available in banks' reserve accounts and the ________ the potential for expanding the money supply.
A) more; greater
B) more; lower
C) fewer; greater
D) fewer; lower
The Keynesian IS/LM Model
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