Within the Keynesian aggregate expenditures model, if the economy is below equilibrium, then there will be:
a. an increase the demand for goods and services.
b. an increase in real GDP.
c. lower interest rates, which will stimulate aggregate demand and keep the economy at full employment.
d. a lower price level, which will quickly guide the economy to full-employment equilibrium.
Question 2
Which of the following correctly describes the difference between commodity money and fiat money?
a. Fiat money is only used in Italy, and is issued by a major Italian automobile manufacturer to support Italian schools.
b. Commodity money is either made out of a valuable commodity like silver or gold, or is redeemable for a valuable commodity. Fiat money is not.
c. Commodity money can only be used to buy commodities such as grains or lumber, while fiat money can be used to buy anything.
d. Fiat money is used during times of emergency, such as hurricanes or war, when the existing stock of commodity money is inadequate to purchase needed goods and services.
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