Which of the following statements is FALSE?
A) Both monetary and interest rate targets cannot be pursued simultaneously.
B) A reduction in the required reserve ratio increases the money supply and pushes down the equilibrium interest rate.
C) An open market purchase reduces the money supply and pushes down the equilibrium interest rate.
D) An open market sale decreases the money supply and pushes up the equilibrium interest rate.
C
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New classical economics
a. resulted from the high inflation and unemployment of the 1970s. b. developed in an era of high inflation and unemployment during the 1970s. c. resulted from the dissatisfaction associated with the prevailing Keynesian orthodoxy. d. Both b and c. e. all of the above.
Fractional reserve banking can be thought of as a bank
A) withholding a portion of its total deposits that are not loaned out. B) holding deposits equal to its net worth. C) paying a fraction of its profit to depositors. D) loaning out all of its reserves.
During an economic contraction, housing and stock prices generally
a. fall, leading to a reduction in aggregate demand. b. fall, leading to an increase in aggregate demand. c. rise, leading to a reduction in aggregate demand. d. rise, leading to an increase in aggregate demand.
A change in the money supply can affect one or more of the components of spending and therefore shift the short-run aggregate supply (SRAS) curve
Indicate whether the statement is true or false