The Growth Rate of Potential GDP Is Not Affected by

question 180

Multiple Choice

The growth rate of potential GDP is not affected by

• A)the growth rate of the labor force.
• B)the growth rate of a nation's capital stock.
• C)the rate of technological progress.
• D)environmentalists' ability to pass regulations.

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Definitions:

Excess Reserves

Excess Reserves are the reserves that banks hold over and above the legal or required minimum they need to keep against deposits.

Open Market Purchase

A monetary policy operation where a central bank buys government securities from the market in order to inject liquidity and encourage lending and investment.

Required Reserve Ratios

Regulatory requirements determining the minimum fraction of customer deposits that commercial banks must hold as reserves, rather than loan out.

Discount Rate

Discount Rate is the interest rate charged by central banks on loans they offer to commercial banks or the rate used to discount future cash flows to their present value.