Author Question: A deep recession hits the world economy, and real GDP in the rest of the world decreases. In the ... (Read 164 times)

mydiamond · **on:** Jun 29, 2018

A deep recession hits the world economy, and real GDP in the rest of the world decreases. In the United States,

A) aggregate supply increases and aggregate demand decreases, so the effect on the price level is uncertain.
B) aggregate supply and aggregate demand both decrease, and the price level rises.
C) aggregate supply and aggregate demand both increase, and the price level rises.
D) aggregate supply decreases while aggregate demand does not change, and the price level rises.
E) aggregate demand decreases while aggregate supply does not change, and the price level falls.

Question 2

If the Fed buys a 100,000 government security from a bank when the desired reserve ratio is 10 percent and the currency drain ratio is 50 percent, the bank can loan a maximum of

A) 90,000. B) 100,000. C) 60,000. D) 40,000. E) 50,000.