When the Fed engages in an open market purchase, the money supply ________ and the nominal interest rate ________.
A. increases; decreases
B. decreases; decreases
C. increases; increases
D. decreases; increases
Answer: A
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Generally, when the Federal Reserve lowers interest rates, investment spending ________ and GDP ________
A) decreases; increases B) increases; decreases C) increases; increases D) decreases; decreases
Who controls a sole proprietorship?
A) owner B) bondholders C) stockholders D) employees
Discuss the relationship between U.S. competitiveness relative to other countries and standards of living in the United States
What will be an ideal response?
If an economy is above potential output and the government opts for a contractionary fiscal policy (running surpluses) to shift the AD curve, an economist with a Classical view, who holds the Ricardian equivalence theorem to be practically true, would conclude that the AD curve:
A. does not shift since the lower government spending is offset by higher private consumption. B. shifts to the left due to lower government spending. C. does not shift since the lower government spending is offset by lower private consumption. D. shifts to the right due to lower government spending.