Author Question: In the figure above, assume that output is 10.5 trillion, while potential output is 12 trillion. ... (Read 61 times)

audie · **on:** Jun 30, 2018

In the figure above, assume that output is 10.5 trillion, while potential output is 12 trillion. Suppose that a combination of fiscal stimulus and recovery of consumer and business confidence shifts the IS and AD curves, as shown in the figure.

The equilibrium real interest rate is ________ percent. A) 3
B) one
C) 2.5
D) 2
E) zero

Question 2

If the Fed purchases 50,000 in T-bills from a bank, by how much will the bank's excess reserves increase?

A) by 50,000
B) by 50,000 times the required reserve ratio
C) by 50,000 divided by the required reserve ratio
D) Not enough information has been provided to answer the question.