When the Macroeconomic Equilibrium Is Such That Real GDP Is

question 45

Multiple Choice

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from _{--------------------}, and the government policy to eliminate this gap will _{--------------------}real GDP and to_{--------------------} the price level.

• A)a recessionary gap; increase; increase
• B)an inflationary gap; increase; decrease
• C)a recessionary gap; decrease; increase
• D)a recessionary gap; decrease; decrease
• E)an inflationary gap; decrease; increase

Interpret the causes behind the rise and fall of housing prices and its impact on the economy.

Understand the factors contributing to the housing bubble and the financial crisis of 2008.

Recognize the role of monetary and fiscal policy in affecting the housing market.

Identify the impact of mortgage-backed securities and the risk of default in the financial sector.

---

Definitions:

Testator

An individual who has made a valid will to direct the distribution of their estate after their death.

Abatement

A reduction, decrease, or complete removal, often in reference to taxes, rent, or nuisances.

Legatee

One designated in a will to receive a legacy (a gift of personal property).

General Bequest

A testamentary gift of a particular amount of money or a specific percentage of the estate, not tied to any particular asset.