If the Fed does not take into account the additional policy channels available in an open economy, then ________ when conducting contractionary monetary policy
A) it is likely to decrease GDP too much and cause a recession
B) it is likely to decrease GDP too little and inflation will persist
C) it is likely to increase GDP too little and cause a recession
D) it is likely to increase GDP too much and inflation will persist
A
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The money supply that consists of currency, transaction deposits, and traveler's checks is
A) the fiduciary monetary system. B) M1. C) M2. D) the liquidity approach.
The Federal Reserve System acts as the government's fiscal agent by
A) auditing taxpayers. B) providing checking account services for the government. C) preparing the budget the President presents to Congress every year. D) determining how to finance a deficit.
Perfect competition
A) has many sellers. B) homogenous products. C) free entry and exit. D) all of these choices.
Use the following graph to answer the next question.
If the interest rate rises from 2% to 3%, the supply of money must have
A. decreased by $100 billion. B. increased by $50 billion. C. decreased by $50 billion. D. decreased by $150 billion.