Author Question: Assume the economy is in short-run equilibrium at a real GDP below its potential real GDP. According ... (Read 116 times)

leo leo · **on:** Jun 30, 2018

Assume the economy is in short-run equilibrium at a real GDP below its potential real GDP. According to Keynesian theory, which of the following policies should be followed?
a. The Federal Reserve should increase the money supply.
b. The federal government should increase spending.
c. The federal government should do nothing because the economy will self correct to potential real GDP.
d. All of the above.

Question 2

Nominal values are values measured in terms of the prices at which goods and services are actually sold.
a. True
b. False
Indicate whether the statement is true or false