The most effective and frequently used tool the Fed has to increase or decrease the economy's money supply is
a. open market operations
b. changes in the legal reserve requirement
c. changes in the discount rate
d. changes in the federal funds rate
e. moral suasion
A
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Suppose that the production function for the economy is Y = AK0.5L0.5. If the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 3, real GDP is
A) $60,000. B) $75,000. C) $150,000. D) $300,000.
If the government enacts contractionary fiscal policy, it could:
A. reduce its spending. B. decrease personal income taxes. C. decrease corporate income taxes. D. All of these are contractionary.
A noticeable drop in the level of business activity is known as a
a. recession. b. collapse. c. lagging indicator. d. contraction.
The own price elasticity of demand for apples is ?1.5. If the price of apples falls by 6 percent, what will happen to the quantity of apples demanded?
A. It will fall 4 percent. B. It will increase 4 percent. C. It will increase 9 percent. D. It will fall 6 percent.