How a Recession Affects Certain Economic Variables
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Question: For each policy or event listed below, please indicate if it will increase (+), decrease (-), or it is uncertain (+/-) how it will affect the economic variable on the right-hand side.
Fearing a recession, Americans begin to save a higher percentage of their incomes.
Will:
GDP (+)
GDP (+) / ( - )
GDP ( - )
Then will:
Interest Rates ( - )
Interest Rates (+)
Interest Rates (+) / ( - )
Then:
Price Level ( - )
Price Level (+) / ( - )
Price Level (+)
And Finally:
Value of $ (+) / ( - )
Value of $ ( - )
Value of $ (+)
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Solution Summary
This solution explains if each event listed will increase, decrease, or have an uncertain effect on the economic variable listed.
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Solution:
GDP -
Interest rates -
Price level -
Value of money +/-
If Americans begin to save a higher percentage of ...
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