Price Level LRAS SRAS 108 100 90 ADT ADo AD2 16.4 17.4 18.2 Real GDP $T 1. If the actual price level is 108, what type of gap is the economy experiencing? What is the size c this gap? 2. If the Federal Reserve tries to close this gap, and the required reserve ratio is 10%, how much w the Fed have to increase/decrease (circle one) the money supply? 3. The Fed's primary method for closing the above gap will be by buying/selling (circle one) U.S. Treasury securities.

Price Level LRAS SRAS 108 100 90 ADT ADo AD2 16.4 17.4 18.2 Real GDP $T 1. If the actual price level is 108, what type of gap is the economy experiencing? What is the size c this gap? 2. If the Federal Reserve tries to close this gap, and the required reserve ratio is 10%, how much w the Fed have to increase/decrease (circle one) the money supply? 3. The Fed's primary method for closing the above gap will be by buying/selling (circle one) U.S. Treasury securities.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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