In the Short-Run Keynesian Model, to Close an Expansionary Gap

question 49

Multiple Choice

In the short-run Keynesian model, to close an expansionary gap of $10 billion dollars government purchases must be:

• A)increased by $10 billion.
• B)decreased by $10 billion.
• C)increased by more than $10 billion.
• D)decreased by less than $10 billion.

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Definitions:

Annual Coupon

The yearly interest payment made to bondholders, usually expressed as a percentage of the bond's face value.

Required Rate

Required Rate refers to the minimum return investors expect to receive on an investment, which is influenced by the investment's risk profile and market conditions.

Credit Default Swap

A financial derivative that allows an investor to "swap" or offset their credit risk with that of another investor.

Recovery Ratio

A financial metric used to determine the amount of money recovered from an investment or project as compared to the amount invested or spent.