If a Recessionary GDP Gap Exists,which of the Following Sets

question 143

Multiple Choice

If a recessionary GDP gap exists,which of the following sets of policies should the Federal Reserve Board pursue?

• A)Sell government securities,lower the discount rate,and lower the required reserve ratio.
• B)Sell government securities,lower the discount rate,and raise the required reserve ratio.
• C)Buy government securities,raise the discount rate,and lower the required reserve ratio.
• D)Buy government securities,lower the discount rate,and lower the required reserve ratio.
• E)Buy government securities,lower the discount rate,and raise the required reserve ratio.

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Definitions:

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, ceteris paribus.

Beef

The flesh of a cow, steer, or bull raised and killed for its meat.

Price Elasticity of Demand

The response level of the demand for a product to variations in its price, determined by dividing the percentage change in the demanded quantity by the percentage change in the price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price.