Reading 28: Monetary Policy - LOS a, (Part 1) ～ Q1-2 black, style, growth, likely

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1.The sustainable growth rate of real GDP is most likely to be increased by:

A)   an increase in the propensity to consume by households.

B)   an increase in interest rates.

C)   the discovery of untapped oil fields.

D)   an increase in government spending.

2.The U.S. Federal Reserve bank defines price level stability as an inflation rate:

A)   equal to 0 percent.

B)   less than 0 percent.

C)   above 3 percent.

D)   between 0 and 3 percent.

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答案和详解如下：

1.The sustainable growth rate of real GDP is most likely to be increased by:

A)   an increase in the propensity to consume by households.

B)   an increase in interest rates.

C)   the discovery of untapped oil fields.

D)   an increase in government spending.

The correct answer was C)

Sustainable growth in real GDP is defined as the growth rate in real GDP that is sustainable over the long term The sustainable growth rate is positively affected by technological advances, increases in the supply of natural resources, and increases in the marginal propensity to save and invest. An increase in government spending does not increase an economy’s sustainable growth rate.

2.The U.S. Federal Reserve bank defines price level stability as an inflation rate:

A)   equal to 0 percent.

B)   less than 0 percent.

C)   above 3 percent.

D)   between 0 and 3 percent.

The correct answer was D)

Price level stability is defined as a stable inflation rate between 0 and 3 percent.