Author Question: Which of these changes is observed in an economy when a recessionary gap is closed in the long run? ... (Read 83 times)

piesebel · **on:** Jun 30, 2018

Which of these changes is observed in an economy when a recessionary gap is closed in the long run?
a. An increase in the inflation rate and a decrease in the unemployment rate
b. An increase in the level of output and a decrease in the price level
c. An increase in both the rate of output and the price level
d. A decrease in both the rate of output and the price level
e. A decrease in the inflation rate and an increase in the unemployment rate

Question 2

For monetary policy to be effective in changing planned investment spending:
a. interest rates must not be responsive to changes in the money supply.
b. interest rates must be sensitive to changes in Gross Domestic Product.
c. investment must be sensitive to changes in interest rates.
d. investment must be sensitive to changes in the price level.
e. interest rates must be sensitive to changes in the price level.