Suppose that the central bank has adopted a fixed exchange rate. When market forces (i.e., demand and supply) lead the exchange rate to fall, the central bank must intervene by ____ units of its own currency to ____ it.  

True or False: Raising the reserve requirement does not affect the size of the monetary base but reduces the size of the money supply. 

The government raises that tax on labor income. As a result, the equilibrium level of employment ____. This is considered ____.

True or False: An open-market purchase reduces the size of the monetary base and reduces the size of the money supply by even more. 

The government reduces that tax on labor income. As a result, the equilibrium level of employment ____. This is considered ____.

The government raises that tax on capital income. As a result, the equilibrium real interest rate ____. This is considered ____.

Suppose that the tax multiplier is -2.0. If the government reduces taxes by $0.4 trillion, Real GDP will ____.

True or False: Members of the Federal Reserve’s Board of Governors serve nonrenewable, 14-year terms.

The government reduces that tax on capital income. As a result, the equilibrium real interest rate ____. This is considered ____.

Real GDP Government Receipts Government Outlays $22.0 trillion $2.8 trillion $3.1 trillion $22.5 trillion $3.0 trillion $3.2 trillion $23.0 trillion $3.2 trillion $3.3 trillion $23.5 trillion $3.4 trillion $3.4 trillion $24.0 trillion $3.6 trillion $3.5 trillion Refer to the table above. The government experiences a “balanced budget” when Real GDP equals _____.