Which of the following Fed actions increases the money supply?
A. Increasing reserve requirements
B. Selling government securities in the open market
C. Decreasing the amount of loans made to commercial banks
D. Buying government securities in the open market
Answer: D
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Induced expenditures are defined as that part of
A) autonomous expenditure that responds to changes in real GDP. B) real GDP that does not respond to changes in aggregate expenditure. C) aggregate expenditure that responds to changes in real GDP. D) aggregate expenditure that does not respond to changes in real GDP. E) autonomous expenditure that does not respond to changes in real GDP.
The fixed exchange rate system set up in the 1940s was the
A) purchasing power parity exchange system. B) gold standard. C) Bretton Woods system. D) European Union euro system.
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What are the effects of an expansionary fiscal policy on interest rates and output in an open economy with floating exchange rates?
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