Please answer all the questions?, thank you. Question6 1 pts If the Fed reduces
ID: 1159738 • Letter: P
Question
Please answer all the questions?, thank you.
Question6 1 pts If the Fed reduces the discount rate, which of the following are most likely to result? O The money supply curve shifts rightward, and the equilibrium interest rate falls in the money market Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy. O O Investment rises, causing the aggregate demand curve to shift rightward, increasing equilibrium real GDP and thus accelerating the economy. Both a. and c. above are correct. Question 7 1 pts According to Keynesian economists, which of the following is not a consequence of increasing the money supply? O A lower interest rate. OGreater investment. O Lower real GDP O Higher real GDPExplanation / Answer
a) "D"
A fall in the discount rate will increase the investment in the economy, shifting the aggregate demand curve and raising the GDP of the nation. And it will also increase the money supply.
b) "C"
Lower real GDP will not result due to the increased money supply.
c) "B"
The vertical portion of the aggregate demand curve because there it will cause a 100% crowding out effect.
d) "A"
Increases in the money supply lower the interest rate and stimulate the interest rate.
e) "A"
It will reduce the interest rate and increase the aggregate demand.