If the Fed Has a Goal of Stable Real GDP

question 51

Multiple Choice

If the Fed has a goal of stable real GDP and government spending increased,which of the following would occur?

• A) The money demand would not change,real GDP would not change,the interest rate would decrease,and there would be partial crowding out.
• B) Money demand would not change,real GDP would not change,the interest rate would increase,and there would be complete crowding out.
• C) Money demand would increase,real GDP would not change,the interest rate would increase,and there would be partial crowding out.
• D) Money demand would not change,real GDP would increase,the interest rate would decrease,and there would be complete crowding out.
• E) Money demand would increase,real GDP would not change,the interest rate would decrease,and there would be complete crowding out.

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Definitions:

Monopolized

Dominated or controlled entirely by a single entity, often reducing competition in the market.

Simultaneous Game

A game theory concept where players choose their strategies and execute their moves without prior knowledge of the others' choices.

Nash Equilibrium

A pair of strategies, one for each player, in which each strategy is a best response against the other.

Simultaneous Game

A strategic situation where players make decisions at the same time without knowledge of the other players' choices, often analyzed in game theory.