Recall the Application about the Fed's policy of quantitative easing to answer the following question(s). Recall the Application. The Fed's goal of this policy was to ________ the prices of government bonds and mortgage securities and ________ the interest rates on both bonds and mortgages.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
Answer: B
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Which of the following will reduce the velocity of circulation of the money stock?
a. The inflation rate increases. b. The interest rate falls. c. Credit cards are used more frequently. d. More employees are paid once a week instead of once a month.
If the public debt increased by the same amount each year during the past three years, then
A. the U.S. Treasury must have issued securities to fund a flow of government spending that exceeded a flow of tax revenues by the same amount during each of the past three years. B. the U.S. government must have operated with the same budget surpluses during the past three years. C. the U.S. government must have experienced budget surpluses that increased by the same amount each of the past three years. D. during each of the past three years, the U.S. Treasury must have bought back the same amount of securities that had previously been issued to cover deficits experienced more than three years ago.
Alex wants to borrow $1,000 from Kara. If he repays the loan in one year, Kara would require him to pay 5 percent interest on the loan. If Alex wants to repay the loan over three years, but Kara strongly prefers present to future consumption, we would
expect the interest rate on a three-year loan to be: A. lower than for a one-year loan. B. greater than for a one-year loan. C. the same as for a one-year loan. D. higher if Kara expected there to be no inflation over the loan repayment period.
Consider the two graphs above. Suppose there is increased concentration in the retail sector (that is, fewer, larger companies). This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A