True or False 20. During a recession, the Federal Reserve pursues contractionary

Question

True or False
20. During a recession, the Federal Reserve pursues contractionary monetary policy.

21. Total spending in the economy is equal to consumption + investment + government spending - net exports.

22. If total government spending in a given year was $3.7 trillion, then all of this spending counted directly in GDP as part of the government spending (G) category.

23. If there is more competition among firms, then the inflation rate will tend to increase.

24. Total spending by the government is about 20% of GDP in the US economy.

Explanation / Answer

a) "False"

They will increase the money supply i.e. follow an expansionary monetary policy.

b) "False"

It is + net exports, it will be added.

c) "True"

All the government spending will be added at its given value.

d) "False"

It will decrease as the prices will come down.

e) "False"

Its 42%.

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