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 ________ bonds on the open market equal to ________.
A. sell, $2 billion
B. sell, $4 billion
C. buy, $2 billion
D. buy, $4 billion
Answer: A
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Which of the following is most likely the most beneficial form of monopoly advantage?
A) better production methods B) input hoarding C) decreasing returns to scale D) government protection
The monopolist and the perfectly competitive firm both choose to maximize profits by choosing the level of output where:
A. MC equals AR and price is equal to minimum ATC. B. the two types of firms make their profit-maximizing decision differently. C. MC equals MR and price is equal to AR. D. MC equals MR and price is equal to minimum ATC.
Which of the following would not represent an incumbent's strategy to deter entry?
A) building excess capacity B) limit pricing C) patents D) restricting output
The government is most likely to block a proposed merger between two companies when:
A. the cross-elasticity between the companies' products is positive and large. B. the income elasticity of the companies' products is negative. C. the cross-elasticity between the companies' products is negative and large. D. the income elasticity of the companies' products is positive.