Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140Assume that the MPC is 0.9 and the reserve requirement is 0.2. If the Federal Reserve needs to decrease aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 4%, then the Federal Reserve should ________ the money supply by ________.
A. decrease, $20 billion
B. decrease, $10 billion
C. increase, $20 billion
D. increase, $10 billion
Answer: B
You might also like to view...
Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia
A market:
A. reflects upsloping demand and downsloping supply curves. B. entails the exchange of goods, but not services. C. is an institution that brings together buyers and sellers. D. always requires face-to-face contact between buyer and seller.
Refer to the data provided in Table 11.3 below to answer the following question(s). Table 11.3ProjectTotal InvestmentExpected Rate of Return(dollars) (percentage)New computer for sales staff $250,00011Remodel for distribution center$200,000 9On-site day care center $100,000 5Employee fitness center$50,000 4Refer to Table 11.3. If the interest rate is 10%, Blackstar Drone Manufacturing's total investment would be
A. $0. B. $50,000. C. $250,000. D. $350,000.
Everything else equal, a depreciation of the dollar against the yuan:
A) will not affect the quantity of dollars demanded. B) will lead to a decrease in the quantity of dollars demanded. C) will lead to an increase in the quantity of dollars demanded. D) can either lead to an increase or a decrease in the quantity of dollars demanded depending on the magnitude of the depreciation.