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Author Question: Other things constant, what is the outcome of expansionary fiscal policies on employment, inflation, ... (Read 48 times)

imowrer

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on: Jun 30, 2018
Other things constant, what is the outcome of expansionary fiscal policies on employment, inflation, real output, and deficits in the short-run?

Question 2

Suppose a bank has 850 million in vault cash and a deposit in the Fed of 100 million. If the bank's required reserves equal 500 million, then the bank has excess reserves of:
 a. 100 million.
  b. 350 million.
  c. 400 million.
  d. 450 million.
  e. 500 million.


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tuwy

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The expansionary policy will lead to an increase in AD which will lead to an increase in real output, a decrease in unemployment, and an increase in inflation. Ceteris paribus, the increase in government purchases and/or decrease in taxes will lead to an increase in the deficit.

Answer to Question 2

d


imowrer

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

peter

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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