The Amount of Consumption That Takes Place When Real GDP

question 32

True/False

The amount of consumption that takes place when real GDP equals zero is called induced consumption.

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Definitions:

Open Market Operations

Monetary policy actions where central banks buy or sell government securities in the open market to control the money supply and interest rates.

Money Supply

The overall pool of economic resources in terms of money available at a particular time in an economy, including coins, paper money, and deposits in savings and checking accounts.

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.

Required Reserve Ratio

The fraction of deposits that banks are required by law to keep on hand or with the central bank as a reserve.