If there is a sudden increase in government spending, which of the following should the Fed do if it wants to keep the price level steady?
a. Do nothing, since the self-correcting mechanism will adjust the economy
b. Sell bonds in the open market
c. Wait, since the price level usually does not change when government spending increases
d. Decrease the required reserve ratio
e. Buy bonds in the open market
B
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In the figure above, which budget line has the lowest relative price of carrots?
A) AD B) BD C) CD D) The relative price is equal for all three budget lines.
Which of the following is a term for account that the depositor has committed to leaving in the bank for a certain period in exchange for a higher rate of interest?
a. Money market fund b. Savings deposit c. Time deposit d. Checking account
An decrease in equilibrium quantity would result from
A. an increase in demand with no change in supply. B. a decrease in supply with no change in demand. C. a decrease in demand with no change in supply. D. both a decrease in supply with no change in demand and a decrease in demand with no change in supply.
A loan made by a bank is considered ________ of that bank.
A. capital B. an asset C. a liability D. net worth