Author Question: Using the data in the above table, if potential GDP for this economy is 25 billion, then in order to ... (Read 55 times)

rachel9 · **on:** Jun 29, 2018

Using the data in the above table, if potential GDP for this economy is 25 billion, then in order to restore full employment, the federal funds rate can be

A) lowered so that government expenditure on goods and services increase.
B) raised so that consumption expenditure, investment, and net exports increase.
C) lowered so that consumption expenditure, investment, and net exports increase.
D) raised so that net exports increase.
E) lowered so that consumption expenditure and investment increase, though net exports decrease.

Question 2

Suppose water rates in Podunk rise by 100. The water consumption in Podunk will tend to

A) remain unchanged, because water is a necessity of life.
B) decrease substantially overnight.
C) decrease more substantially over time, as residents discover substitutes for water.
D) decrease, and therefore lead to a lower price of water.