The possibility of running out of bank reserves so that the central bank itself becomes insolvent.

Bankers will reduce their reserves if the risk of a run on the bank has been reduced by the central bank’s policy to serve as lender-of-last-resort

The central bank will begin to compete with private banks in lending to households and businesses

The provision of banks with liquidity that can be relied on in a time of crisis creates an incentive for banks to take on excessive risk in their investment strategies, making even greater future demands on the lender-of-last resort more likely than before

there is an excess supply of goods equal to YY

desired demand (YC) is lower than output (YB) and inventories of unsold goods will accumulate.

desired demand (DD) will shift vertically upward to pass through point B for goods market equilibrium

The government budget will be in surplus and equal to BC

the difference (Y-Y) divided by the difference (DD- DD).

the length of the segment BA divided by the difference (Y-Y).

the difference (Y-Y) divided by the difference (G- G).

the slope of IS

(A) interest rates; (B) the real money stock; (C) monetary targeting

(A) inflation; (B) interest rates; (C) inflation targeting

(A) real GDP; (B) interest rates; (C) the monetary policy

(A) inflation; (B) real GDP (C) the monetary policy

the Keynesian assumption.

the classical dichotomy

sticky prices

the Taylor rule