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Exhibit 15.4 -Exhibit 15.4 Depicts Short-Run Equilibrium in an Aggregate Demand-Aggregate Supply

Question 98

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Exhibit 15.4
Exhibit 15.4 -Exhibit 15.4 depicts short-run equilibrium in an aggregate demand-aggregate supply model. Which of the following policies will allow the Fed to close the GDP gap in the long run? A) a decrease in government spending B) a decrease in taxes C) a purchase of U.S. government bonds (a sale would expand the economy) D) a decrease in the discount rate (an increase would expand the economy) E) an increase in the required reserve ratio
-Exhibit 15.4 depicts short-run equilibrium in an aggregate demand-aggregate supply model. Which of the following policies will allow the Fed to close the GDP gap in the long run?


A) a decrease in government spending
B) a decrease in taxes
C) a purchase of U.S. government bonds (a sale would expand the economy)
D) a decrease in the discount rate (an increase would expand the economy)
E) an increase in the required reserve ratio

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