If a recessionary GDP gap exists, which of the following sets of policies should the Federal Reserve Board pursue?
A. Sell government securities, lower the discount rate, and lower the required reserve ratio.
B. Sell government securities, lower the discount rate, and raise the required reserve ratio.
C. Buy government securities, raise the discount rate, and lower the required reserve ratio.
D. Buy government securities, lower the discount rate, and lower the required reserve ratio.
D. Buy government securities, lower the discount rate, and lower the required reserve ratio.
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Refer to Figure 15-7. Suppose the Fed sells Treasury Bills in pursuit of contractionary monetary policy. Using the static AD-AS model in the figure above, this situation would be depicted as a movement from
A) B to C. B) B to D. C) C to B. D) C to D. E) A to B.
Consider a market that is in equilibrium. If it experiences a decrease in demand, what will happen? The demand curve will shift to the:
A. left, and the equilibrium price and quantity will rise. B. left, and the equilibrium price will increase and the equilibrium quantity will decrease. C. left, and the equilibrium price and quantity will fall. D. right, and the equilibrium price and quantity will fall.
When the Fed adopts an expansionary monetary policy: a. the demand for investment curve shifts to the left
b. the demand for investment curve shifts to the right. c. there is a downward movement along the demand for investment curve. d. there is an upward movement along the demand for investment curve. e. there is no impact on the demand for investment curve.
In the aggregate expenditures model, a tax increase causes a(n):
a. upward shift in the aggregate expenditures curve. b. downward shift in the aggregate expenditures curve. c. shift in the 45-degree line. d. rightward movement along the aggregate expenditures curve. e. leftward movement along the aggregate expenditures curve.