Because the Fed's current tool for changing the interest rate is ...

[Tazate]

Question 1

If the government spending multiplier were 4.2, a $1 billion increase in government spending would raise GDP by

◦ $2.1 billion after one year.
◦ $1 billion after two years.
◦ $3.2 billion after one year.
◦ $4.2 billion after one year.

Question 2

Because the Fed's current tool for changing the interest rate is to change the ________, once the decision has been made to make the change, ________.

◦ rate it pays on bank reserves; the implementation lag is usually very long
◦ rate it pays on bank reserves; there is in effect no implementation lag
◦ required reserve rate; the implementation lag is usually very long
◦ required reserve rate; there is in effect no implementation lag

[steff9894]

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[Tazate]

Excellent

[amandalm]

Thanks for the timely response, appreciate it