The money supply has decreased from $2.75 trillion to $2.25 trillion. Which of the following could have caused this increase?
A. The Fed purchased government securities from the public.
B. The Fed decreased the discount rate.
C. Consumers who were holding money within the banking system withdrew this money.
D. Commercial banks decide to hold fewer excess reserves.
Answer: C
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In the aggregate expenditure model, which of the following variables is assumed to be independent of real GDP?
A. consumption B. saving C. investment D. profit
Describe the two basic strategies of unions in increasing wage rates for their members.
What will be an ideal response?
In a fixed exchange rate system
A. market forces play a role in determining the fixed value of a currency. B. a central bank affects the value of a currency by changing its foreign exchange reserves. C. the International Monetary Fund determines exchange rates. D. market forces and the country's stock of gold determine its exchange rate.
If the Fed decreases the money supply, we should expect the interest rate
a. to fall, spending on automobiles and business investment spending to rise, and the price of bonds to increase b. to rise, spending on automobiles and business investment spending to fall, and the price of bonds to decrease c. to rise, spending on automobiles and business investment spending to fall, and the price of bonds to increase d. to fall, spending on automobiles and business investment spending to fall, and the price of bonds to decrease e. to rise, spending on automobiles to fall, business investment to rise, and the price of bonds to decrease