Multiple Choice
Consider the following equations: AE = 200 + 0.5Y - 10r
R = 2 + 1.5(? -1) [Target ?* is one] AE=Y
Y = 390 - 30?
On the basis of the above, select the false statement from the following statements.
A) If ? = 1, r = 2.
B) If ? = 1, Y = 360.
C) If ? is greater than target ?*, the central bank will raise r. As a result, Y will decline.
D) If ? is greater than target ?*, the central bank will raise r. As a result, Y will remain unchanged.
Correct Answer:
Verified
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