Because of Automatic Fiscal Policy, When Real GDP Decreases

question 73

Multiple Choice

Because of automatic fiscal policy, when real GDP decreases

• A)government expenditures increase and tax revenues decrease.
• B)the economy will automatically go to full employment.
• C)government expenditures equal tax revenues.
• D)government expenditures decrease and tax revenues increase.

Explain monetary policy's impact on inflation and employment in the short run.

Understand why the Federal Reserve is considered the "lender of last resort" and the implications thereof.

Explain the role, composition, and operational dynamics of the Federal Reserve Open Market Committee (FOMC).

Discuss the significance of bank reserves, the money multiplier effect, and how fractional reserve banking contributes to money supply changes.

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Definitions:

Physical Characteristics

The observable attributes or features of an organism, such as height, eye color, and body type.

Saturation

The point at which a substance cannot absorb or dissolve any more of another substance, or in media, the state of being completely filled with content.

Physical Characteristics

The defining traits or features of a person's body, including height, weight, skin color, hair type, and facial features.

Intensity

The magnitude or strength of a phenomenon or a signal, often used in contexts ranging from physics to emotions.