Refer to the Information Provided in Figure 34

question 123

Multiple Choice

Refer to the information provided in Figure 34.1 below to answer the question(s) that follow. Figure 34.1
-Refer to Figure 34.1. If the economy is closed and the government increases spending by 15, the new equilibrium output is

• A) 150.
• B) 175.
• C) 180.
• D) 200.

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Definitions:

Reserve Rate

The fraction of depositors' balances banks must have on hand as cash, a requirement determined by the central bank.

Gold Coins

Metallic forms of money minted from gold, used historically and currently as investment or collectible items.

Transactions Demand

The demand for money as a medium of exchange, reflecting the desire to hold money for everyday transactions.

Banks Create Money

The process by which commercial banks lend more than the reserves they hold, effectively creating new money through the issuance of loans.