Author Question: Suppose that the economy is producing below potential GDP and the Fed implements the correct change ... (Read 58 times)

bobthebuilder · **on:** Jun 29, 2018

Suppose that the economy is producing below potential GDP and the Fed implements the correct change in monetary policy, but not until after the economy has passed the trough of the recession. Then

A) the Fed's contractionary policy will result in too large of a decrease in GDP.
B) the Fed's expansionary policy will result in too large of an increase in GDP.
C) the Fed's expansionary policy will result in too small of a decrease in GDP.
D) the Fed's contractionary policy will result in too small of a decrease in GDP.

Question 2

Suppose that in 2016, the national income in the United States was 200 billion, depreciation was 15 billion, personal taxes were 20 billion, and transfer payments were 10 billion. Gross domestic product in 2016 is

A) 185 billion. B) 215 billion. C) 220 billion. D) 245 billion.