Author Question: There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ... (Read 43 times)

fasfsadfdsfa · **on:** Jun 29, 2018

There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.

A) increase; decrease to its initial value B) decrease; decrease further
C) decrease; increase to its initial level D) increase; increase further

Question 2

Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason?

What will be an ideal response?

Sierray · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

Banks create money to make a profit. Banks create money when they make loans. The loans take the form of checking account deposits. Asking why banks create money is the same as asking why they make loans.