To decrease the nation's money supply, the Fed can:
A. increase reserve requirements.
B. decrease the discount rate.
C. decrease reserve requirements.
D. buy government securities in the open market.
Answer: A
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According to liquidity preference theory, if the price level increases, then the equilibrium interest rate
a. rises and the aggregate quantity of goods demanded rises. b. rises and the aggregate quantity of goods demanded falls. c. falls and the aggregate quantity of goods demanded rises. d. falls and the aggregate quantity of goods demanded falls.
If there is an increase in the nominal (money), the real wage
A. will also rise. B. will also rise, unless the consumer price index rises. C. will also rise, unless the consumer price index rises as much or more than the nominal (money) wage. D. None of the choices are true.
Which of the following institutions may result in hold-up?
A. Long-term contracts B. Vertical integration C. Spot markets D. Piece rates
Right-to-work laws
A. make it illegal for a state to pass any laws regarding union membership. B. make it illegal to require a union member to work abroad. C. make it illegal to require union membership as a condition of continuing employment in a particular firm. D. make a closed shop arrangement a legal condition that allows employees to obtain a particular job.